When people think about buying or selling a home, they usually focus on the purchase price. But there's another important part of the transaction that often catches people off guard: closing costs. 

Understanding these expenses before you reach the closing table can help you budget with confidence and avoid last-minute surprises. 

What Are Closing Costs? 

Closing costs are the fees and expenses required to complete a real estate transaction. They cover everything from legal services and lender fees to recording documents with the state. 

The exact amount varies depending on the property, financing, and terms of the sale. Both buyers and sellers should expect to have closing costs in addition to the purchase price or mortgage payoff. The Consumer Financial Protection Bureau (CFPB) provides a helpful overview of what buyers can expect to see on a Closing Disclosure, the document that outlines all final loan terms and closing expenses. 

Common Closing Costs for Buyers 

If you're purchasing a home in Massachusetts, your closing costs may include: 

• Attorney fees (Massachusetts is an attorney-closing state.)
• Loan origination and underwriting fees
• Appraisal and credit report fees
• Title search and lender's title insurance
• Recording fees
• Prepaid property taxes and homeowner's insurance
• Initial escrow deposits for taxes and insurance 

Many buyers budget roughly 2% to 5% of the purchase price, although the final amount depends on the loan program, lender, and individual circumstances. Your lender is required to provide a Loan Estimate early in the mortgage process so you have an idea of these costs before closing. Learn more from the CFPB's guide to the Loan Estimate. 

Common Closing Costs for Sellers 

Sellers have a different set of expenses. These often include: 

• Real estate brokerage compensation (if applicable under your listing agreement)
• Attorney fees
• Mortgage payoff and discharge fees
• Recording fees
• Smoke and carbon monoxide certificate compliance
• Massachusetts deed excise tax (often called the transfer tax) 

One cost that surprises many sellers is the Massachusetts deed excise tax, which is generally paid by the seller when ownership transfers. The tax is established by state law and is based on the sale price of the property. The Massachusetts Department of Revenue explains how the deed excise tax is applied. 

Can Closing Costs Be Negotiated? 

Sometimes. 

While government fees and taxes are fixed, some lender fees, attorney fees, and seller concessions may be negotiated during the transaction. 

Depending on market conditions, buyers may also ask sellers to contribute toward closing costs as part of the purchase agreement. Whether that makes sense depends on the strength of the market, the home's pricing, and the overall offer strategy. 

Why Preparation Matters 

One of the best ways to reduce stress during a real estate transaction is knowing your numbers early. 

Whether you're buying your first home in Peabody, selling a property in Beverly, or moving anywhere across Greater Boston or the North Shore, reviewing estimated closing costs before you're under contract allows you to make informed financial decisions. 

Every transaction is different, but there shouldn't be surprises at the closing table. 

A knowledgeable real estate professional, along with your lender and closing attorney, can help you understand exactly what to expect so you can focus on the excitement of your next chapter, not unexpected expenses. 

This article is intended for informational purposes only and should not be considered legal, tax, or financial advice. Closing costs vary by transaction. Consult your real estate agent, lender, and attorney for guidance specific to your situation.