Closing costs in Missouri can vary widely. Learn how much you might pay and what expenses are typically included in these costs.
Navigating closing costs can be tricky. It’s tough to know what can be negotiated or what the buyer's responsibilities are versus the seller's in a real estate transaction. And it can be even tougher to budget for these costs ahead of time and smooth your transition. The best way to cut through the clutter of closing costs is to know what to expect ahead of time and how different variables can influence these closing costs.
So, how much are closing costs in Missouri? Read on as we answer this question and then explore how we can help you cut closing costs.
In recent years, Missouri has held the coveted distinction of having the lowest closing costs in the country, with buyer closing costs amounting to just .8 percent of a home’s value, on average. This makes for sizable savings compared to states like Pennsylvania and Maryland—where buyer closing costs are over four times higher—as well as the neighboring Illinois, with its average of 2.1 percent.1
But while buyers generally pay the majority of the closing costs in other parts of the country, sellers may find themselves with a larger-than-usual bill when it comes time to close in Missouri. This is mostly due to real estate commissions and buyer negotiations. As a result, the average amount sellers pay in closing costs is around 2.7 percent of the home’s value, but can climb as high as 8 percent when you factor in real estate agent commissions.2
When it comes to closing costs, there’s an added benefit for both buyers and sellers in Missouri: the median sale price of a home is significantly less than the national average, at roughly $250,000 compared to over $400,000 in the rest of the country. This means that buyers can purchase a home for less and that both buyers and sellers have thousands less to pay in closing costs when it comes time to sign on the dotted line.
Now that we understand how Missouri’s closing costs compare to the rest of the country, let’s examine some of the most common closing expenses. First up: buyer closing costs.
Closing costs begin accumulating at the very beginning of the Missouri homebuying process. Buyers owe loan origination fees to their mortgage lender simply for processing a loan application and establishing a new line of credit. On average, a loan origination fee costs from .5 to 1 percent of a home’s value. At the median home cost in Missouri, this loan origination fee would amount to anywhere from $1,250 to $2,500, making it one of the most substantial closing costs many Missouri buyers will face.
Home inspection and home appraisal fees are another piece of the closing cost puzzle, each fitting in its own unique way. Home inspections are often required by a mortgage lender and ensure that the home is structurally sound, without significant damage, and absent of any red flags. This process assures a lender that they’re making a mostly risk-free investment in the property. And if you’re wondering how much a home inspection costs in Missouri, the answer is it generally costs between $200 and $500.
Home appraisals, on the other hand, reassure lenders that the property they’re preparing to invest in is worth the asking price. Appraisers closely examine the interior and exterior of the home, noting the number of bedrooms and bathrooms, the square footage, and any value-adding improvements that may have been made. The home appraisal fee hovers around $400, but will depend on the overall size and complexity of the property.
So, buyers can expect to pay between $600 and $900 for both an inspection and appraisal.
The last primary closing costs for Missouri buyers are title search, title insurance, and attorney fees. When a home is sold, a title search is conducted to ensure there are no outstanding liens or ownership claims to the property and that it can be cleanly sold from the seller to the buyer. Title insurance and attorney fees average around $150, but it’s worth noting that sellers will frequently assume this cost.
For roughly 1 percent of the home’s total closing costs, title insurance serves a similar purpose, covering legal costs for buyers, sellers, and lenders in the event that an owner not discovered by the title search makes a claim on the property.
Given the complexity of some real estate transactions, it’s not uncommon for Missouri buyers to also enlist legal counsel to help them navigate it all. The price of this advice can vary greatly, from a few hundred dollars to a few thousand — but it’s worth noting that real estate agents will likely be able to provide any necessary guidance throughout this process.3
Some Missouri seller closing costs (like title search and title insurance) overlap with those of buyers, but there are a handful of expenses that are primarily unique to sellers.
Property taxes and homeowners association (HOA) fees are yet another instance where buyer and seller closing costs overlap, but depending on when closing takes place, sellers may end up paying the lion’s share of these costs. This is because these fees are prorated. If you close in the middle of the month, you and your buyer will be responsible for equal shares. Close later in the month, however, and you’ll find yourself owing a larger percentage.4
As we’ll discuss later, property taxes are often a point of negotiation, meaning sellers may find themselves paying more than their “fair” share of property taxes for the sake of closing the deal.
Real estate commissions make up a sizable chunk of seller closing costs, amounting to between 5 and 6 percent of the total purchase price of the home. On an average home in Missouri, this can mean an extra $15,000 in closing costs. Unlike buyers, however, who pay their closing costs largely out of pocket, this expense is paid directly from the proceeds of the sale. Still, sellers planning to work with a real estate professional should budget with this expense in mind as they shop for their next home or plan their next move.
Most seller closing costs can be anticipated, but the Missouri housing market can result in quite a few unknowns. In a buyer’s market, where supply is high and demand is relatively low, buyers have more negotiating power compared to sellers. This often means that closing costs generally reserved for buyers (or costs that are typically split between the two parties) will become the sole financial responsibility of sellers in order to seal the deal. So, while sellers can expect to spend an average of 3–8 percent of their home’s total value in closing costs, market conditions can inch this number even higher.
As of August 2024, Missouri’s housing market seems to slightly favor sellers, but in less competitive neighborhoods this advantage may tip toward buyers.
For the most part, closing costs in Missouri are fairly predictable, especially if you’re a buyer. However, it’s still a good idea to estimate these costs to understand exactly what you’re getting yourself into. Some of the best ways to estimate these costs include:
As far as closing costs are concerned, Missouri buyers and sellers are already in the best possible position. However, there are still a handful of ways both buyers and sellers can reduce closing costs.
When you receive a loan estimate complete with your expected closing costs, how does a lender arrive at this estimate? Simply put, they price out your various closing costs using the rates of their chosen vendors. But just because they’ve recommended vendors doesn’t mean you have to work with those vendors. Shopping around for different service providers may save you even more money on closing costs. Both buyers and sellers can comparison shop, and doing so may be one of the best ways to keep closing costs low on both sides.
As we mentioned earlier, certain closing costs are prorated, meaning buyers and sellers will owe different amounts depending on the closing date. This means that buyers looking to reduce closing costs can (and should) strategically time their closing date.
While not very common, a no-cost closing may be an option, depending on your lender. However, there’s a catch: opting for a no-cost closing will likely drive up your interest payment. This may be an appealing option for Missouri homebuyers looking to save a few thousand dollars from their closing fee, but an elevated interest rate over the course of a 30-year loan term can make this a far more costly option in the long run.
With Truehold’s sell-and-stay transaction, you can sell your home to Truehold without jumping many of the hoops of a traditional sale. And instead of paying up to 8 percent of your home’s value in closing costs, you pay a flat 5.5 percent—a savings of over $6,000 on a $250,000 home.
But it gets even better. In a traditional Missouri home sale, you’ll likely pay seller-side closing costs and buyer-side closing costs at the same time as you part ways with one property and purchase another. With Truehold, however, you can remain in your home as a renter after receiving your valuable home equity. This gives you time to budget and prepare for buyer closing costs as you purchase your next home, make a plan for retirement with your equity in hand, or just enjoy the peace of renting without worrying about the challenges of owning a home while you figure out your next move on your own time.
Missouri’s closing costs can be among the lowest in the country for buyers. However, sellers may find themselves in a different and far more costly situation. Fortunately, Truehold’s Kansas City sell-and-stay transaction can be a great way to save on Missouri closing costs while simplifying the process of selling your home altogether.
If you want to learn more about how Truehold’s option can help you reduce your closing costs while enjoying financial freedom, connect with one of our Missouri advisors today.
Sources:
1. Bankrate. Average closing costs on a house in 2024. https://www.bankrate.com/real-estate/average-closing-costs-by-state/
2. Clever Real Estate. Seller Closing Costs in Missouri: 2024 Update. https://listwithclever.com/real-estate-blog/seller-closing-costs-in-missouri/
3. Rocket Mortgage. What Title Fees Will You Pay At Your Closing? https://www.rocketmortgage.com/learn/title-fees
4. NerdWallet. What Are the Closing Costs for a Home Seller? https://www.nerdwallet.com/article/mortgages/closing-costs-home-seller
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