How to Negotiate the Payment of Settlement Costs

Settlement costs on a home are often referred to as closing costs. These can include any and all expenses incurred by professionals involved in transferring ownership of a property. Refiling titles, transferring liens and paying any outstanding property expenses can all result in costs at closing. These costs can be paid by the buyer, the seller or split between the two parties.

Use Costs as Bargaining Chip

When you are selling a home, it is common to receive an offer from a buyer that includes "seller-paid closing costs." The buyer is asking you to pay the settlement costs as part of the sale. Remember: paying settlement costs is equivalent to reducing the cost of the sale by 1 to 3 percent. If you pay the costs, hold the sale price accordingly.

Be Reasonable with Responsibilities

If the buyer uncovers an existing tax lien on your property, the expense of this issue could kill the sale. Be reasonable with these issues by accepting responsibility for costs you have created in the time you lived in the home. This applies to any liens, including home equity title liens, that will need to be transferred. Since you created the expense, it makes sense to pay the expense. The buyer will appreciate the fairness of this gesture.