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Simple English definitions for legal terms
closing costs
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A quick definition of closing costs:
Definition: Closing costs are fees and expenses that people have to pay when they buy or sell something, like a house. These costs are not part of the price that was agreed upon. When someone buys a house, they might have to pay for things like getting a loan, hiring a lawyer, getting insurance, and paying taxes. Usually, the buyer pays for these costs, but sometimes the seller agrees to pay some of them. Closing costs can be a lot of money, sometimes 2-5% of the price of the house. When big companies buy or sell things, they also have to pay closing costs, like fees for inspections and managing the transition.
A more thorough explanation:
Definition: Closing costs are fees and expenses that are incurred by parties in the finalization of a deal that are not part of the negotiated price. These costs usually arise in real estate transactions like buying a home.
For example, when buying a home, the buyer and seller can incur costs for applying for a loan, escrow fees, attorney fees, insurance fees, taxes, and other fees. Most fees are paid by the buyer, but sometimes sellers agree to cover some closing costs. Closing costs can be substantial in a transaction, ranging from around 2-5% of the purchase price of home sales.
Large business transactions can also incur a variety of similar ‘closing costs’ that must be considered in negotiating agreements, mergers, and acquisitions. These costs can include fees for inspections and management of transitions.
The examples illustrate that closing costs are additional expenses that are incurred during the finalization of a deal, and are not part of the negotiated price. These costs can be significant and should be taken into consideration when negotiating a deal.