Closing Costs, Commissions, and Seller Concessions in Utah
Closing costs are the fees and expenses paid at closing, separate from your down payment. They typically run 2 to 5 percent of the purchase price. Understanding what you'll pay, what the seller pays, and how to negotiate seller concessions helps you budget accurately and can save you thousands of dollars.
What's in This Article
What Closing Costs Are
Closing costs are the fees and expenses you pay on closing day, in addition to your down payment. They cover things like loan origination fees, appraisals, title insurance, escrow, property taxes, homeowner's insurance, and other services required to transfer the property to you. They are separate from your earnest money deposit and your down payment.
For buyers in Utah, closing costs typically range from 2 to 5 percent of the purchase price. On a $400,000 home, that could be $8,000 to $20,000. The exact amount depends on the loan type, the purchase price, property taxes, insurance, and other factors specific to your transaction.
Buyer Closing Costs Breakdown
Here are the main categories of closing costs that buyers typically pay in Utah:
Loan Origination Fee
Your lender charges this fee to originate the loan, typically 0.5 to 1 percent of the loan amount. On a $300,000 loan, that's $1,500 to $3,000. This covers the cost of processing your application, verifying income, and underwriting.
Appraisal Fee
The lender requires an appraisal to ensure the home's value supports the loan amount. This typically costs $500 to $700. You often pay this fee upfront when you apply for the loan, not at closing.
Credit Report Fee
Lenders pull your credit report, typically costing $30 to $50. This is usually paid upfront as well.
Title Insurance and Title Search
Title insurance protects your lender (lender's policy, required) and you (owner's policy, recommended). The lender's policy typically costs $400 to $800 depending on the loan amount. In Utah tradition, the seller pays for the owner's policy, but this is negotiable.
Escrow and Settlement Fees
The title company or escrow agent charges a fee for holding earnest money, coordinating the closing, and preparing documents. These fees vary by county and company, typically $300 to $800.
Recording Fees
The county recorder charges a fee to record the deed and mortgage documents, typically $50 to $150 depending on the county.
Prepaid Interest
When you close before the end of the month, you pay the lender for the interest that accrues from closing to your first payment date. This varies based on your loan amount and interest rate.
Property Tax Proration
Property taxes are prorated between you and the seller on closing day. If the seller has paid taxes through the end of the year and you're buying in June, you'll reimburse them for taxes through year-end.
Homeowner's Insurance
Your lender requires you to prepay the first year's homeowner's insurance premium at closing. This protects the lender's interest in the property. The cost varies based on the home, location, and coverage level.
HOA Transfer Fees
If the property is in a homeowners association, there may be fees to transfer the property into your name, typically $75 to $300.
“I did not know how many opinions people had about paint colors until I bought a house.”
Seller Closing Costs in Utah
Sellers also have closing costs, though they often differ from buyer costs:
- Owner's Title Insurance Policy: traditionally paid by the seller in Utah
- Real Estate Commission: now negotiated per the 2024 NAR settlement
- Property Tax Proration: the seller's share of taxes through closing day
- Recording Fees: for recording the deed transferring the property
- Liens and Payoffs: any mortgage balance, lines of credit, or judgments being paid off
How Commissions Changed After the NAR Settlement
Historically, the seller's agent and buyer's agent split a commission that the seller paid. This was typically split evenly. After the 2024 National Association of Realtors settlement, significant changes took effect:
- Buyer's agent commission is no longer published on the MLS
- Buyer's agent compensation must be negotiated and disclosed upfront in a Buyer's Broker Agreement (BBA)
- Sellers are not obligated to offer a commission to buyer's agents
- Sellers may offer a fixed amount or percentage as a concession to cover buyer's agent compensation
This means buyer's agent compensation is now a negotiable item in your offer. Your agent should discuss this with you before you make an offer, and the buyer's commission should be addressed in your purchase contract.
Seller Concessions Explained
A seller concession is when the seller agrees to pay some or all of your closing costs. Instead of you bringing more cash to closing, the seller contributes funds toward your closing costs as part of the sale.
How They Work
In your offer, you can request that the seller pay a specific dollar amount or a percentage of the purchase price toward your closing costs. For example, on a $400,000 home, you might request a 2 percent concession, which would be $8,000 toward your closing costs.
Why Concessions Matter
Seller concessions reduce the cash you need to bring to closing. If you're struggling to cover closing costs, a seller concession can make your offer more feasible. From the seller's perspective, a concession is often better than negotiating the purchase price down, because it doesn't affect their sales price or their agent commission.
Negotiating Concessions
Ask your real estate agent about requesting a seller concession in your offer. The seller can agree, counter with a lower amount, or refuse. In a buyer's market, concessions are often easier to negotiate. In a competitive market, sellers may be less willing.
Tip: Concession vs Price Reduction
If you need financial help to close, ask for a seller concession rather than a price reduction. A concession lowers your closing cost burden without affecting the purchase price. A price reduction lowers both the price and your lender's comfort with the property value. In many cases, a concession is more favorable to you.
Loan Limits on Seller Concessions
Different loan programs limit how much of a seller concession you can use. The lender sets these limits based on loan type and down payment percentage. Here are the typical maximums:
| Loan Type | Down Payment 5% or less | Down Payment 5-10% | Down Payment 10%+ |
|---|---|---|---|
| FHA | 6% | 6% | 6% |
| VA | 4% | 4% | 4% |
| USDA | 3% | 3% | 3% |
| Conventional | 3% | 2% | 2% |
These percentages are of the purchase price. Ask your lender what concession limit applies to your loan program before you make an offer.
Loan Estimate vs Closing Disclosure
Your lender provides two key documents that detail closing costs:
Loan Estimate
Issued within 3 days of your loan application, the Loan Estimate is an estimate of all your closing costs, loan terms, and monthly payments. This is not the final number, but it should be close. Review it carefully and ask questions about any fees that seem high or unexpected.
Closing Disclosure
Issued at least 3 days before closing, the Closing Disclosure shows your final closing costs and loan terms. Review this document carefully and compare it to your Loan Estimate. If numbers have changed significantly, ask why. You have a right to understand every fee on your closing statement.
Request a Closing Cost Estimate Early
Ask your lender for a closing cost estimate as soon as you have a purchase contract. This helps you budget and negotiate with the seller. Don't wait until 3 days before closing to learn about unexpected costs.
Comparison Table: Buyer vs Seller Closing Costs in Utah
| Cost Item | Typically Paid By | Negotiable? |
|---|---|---|
| Loan Origination Fee | Buyer | No (lender sets it) |
| Appraisal Fee | Buyer | No (lender requires it) |
| Title Insurance (Lender's Policy) | Buyer | No (lender requires it) |
| Title Insurance (Owner's Policy) | Seller (by tradition) | Yes |
| Escrow/Settlement Fees | Buyer or split | Slightly |
| Real Estate Commission | Seller | Yes (now negotiated) |
| Property Tax Proration | Both (prorated) | No (based on taxes) |
| Recording Fees | Varies by county | No (county sets fees) |
| Homeowner's Insurance | Buyer | No (buyer's policy) |
Key Takeaways
Remember This About Closing Costs and Concessions
- Closing costs typically run 2-5% of the purchase price and are separate from your down payment
- Buyer closing costs include loan fees, appraisals, title insurance, escrow, property taxes, and insurance
- Seller closing costs include commission, owner's title insurance, and property tax proration
- Buyer's agent commission is now negotiated upfront per the NAR 2024 settlement
- Seller concessions can reduce your cash needed at closing and should be negotiated in your offer
- Different loan programs limit how much of a seller concession you can use
- Review your Loan Estimate and Closing Disclosure carefully and ask questions about unexpected fees
Sources and References
ContinUe Reading
Most buyers assume closing day is the day they get the keys but closing, funding, and possession are actually three separate events that can happen on different days. Understanding the difference between these critical milestones will help you plan your move and avoid costly scheduling mistakes.
Conventional loans are the most common mortgage in Northern Utah, offering flexibility and lower long-term costs for buyers with solid credit and at least 3–5% down. This guide covers credit score requirements, down payment options, PMI, and how conventional loans compare to government-backed programs.
Your credit score doesn’t just determine whether you qualify for a mortgage, it directly affects the interest rate you’ll pay over the life of the loan, which can add up to tens of thousands of dollars. This article explains what lenders look for, how score requirements differ by loan type, and what you can do to improve your score before you apply.
Even with a strong income, too much existing debt can cut your home buying power by $100,000 or more and most buyers don’t know this until they’re already in the process. This guide explains how lenders calculate your debt-to-income ratio, what limits apply to each loan type, and how to strategically lower your DTI before you apply.