How Much Are Closing Costs in Massachusetts? (And 5 Ways to Reduce Them)

Editor’s note: This post will help answer the question: How much are closing costs in Massachusetts (MA)? The example costs provided are based on median home prices and typical fees. Your closing costs may differ depending on your circumstances and the terms of your home purchase.

Massachusetts closing costs for homebuyers tend to run approximately 2.5% of the purchase price, and 1% for sellers, not including real estate agent commissions. In this article, we’ll break down those costs for you and explain a few different options to minimize your out-of-pocket expenses.

What are closing costs?

Real estate closing costs are expenses incurred by buyers and sellers during the final stages of a real estate transaction when the transfer of ownership is completed. These costs typically include fees for services such as title searches, appraisals, legal fees, recording fees, mortgage insurance, and taxes.

Nelson Zide, a Massachusetts real estate agent who works with 80% more single-family homes than the average Framingham agent, explains that one of the biggest mistakes buyers and sellers make in calculating purchase price or net profit is forgetting about closing costs.

“Buyers have to bring cash, and not everybody has the cash. The seller knows the commission, but almost no seller in Mass knows about our transfer tax. It’s a lot of money. They don’t know they have to hire their own lawyer. They don’t know about smoke detectors and final water bills.”

A Top MA Agent Can Help Reduce Your Costs

Partner with a top Massachusetts buyer’s agent who can help you navigate your homebuying journey and reduce the final amount you’ll pay at closing. We analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.

Find a Buyer's Agent

Who pays for closing costs in Massachusetts?

Both buyers and sellers are responsible for certain fees and closing costs in a home sale transaction, which we’ll discuss in more detail in the next section.

• Buyers typically pay: 2%-3% of the home’s price.
• Sellers typically pay: 1% of the home’s price, plus agent commissions, which averages 5%-6% in Massachusetts.

While the above amounts are typical for each side of the transaction, buyers and sellers can negotiate to determine who pays specific closing costs.

How much are closing costs in Massachusetts?

Buyer closing costs in Massachusetts

Massachusetts is an attorney state, which means that both sides of a real estate transaction must be represented by an attorney. Lending fees in Massachusetts are also a big expense for buyers.

“If you’re in my market at $525,000, your ballpark closing costs will be almost $13,000,” says Zide.

Closing costs may vary depending on your local requirements and your lender. For example, you may pay an HOA approval and prorated monthly fee if you’re moving into an HOA. Additionally, depending on your mortgage company, some fees, such as the credit report, may be included in the lending fee. For this reason, it’s important to discuss closing costs with your real estate agent or mortgage advisor and review your mortgage documents closely to understand what fees you’ll pay.

The following list of buyer closing costs is based on a $525,000 home transaction:

*Example estimate based on a $525,000 median-priced Massachusetts home.

Additional costs:

Prepaid points (optional): Your lender may allow you to buy down the interest on your loan by paying prepaid points at closing. These are typically 1% per point. For example, to get a 1% reduction on your interest rate for a $500,000 home, you would prepay $5,000 at closing.

Down payment: In addition to your closing costs, you will be required to pay an out-of-pocket down payment at closing. Down payments vary by lender, borrower, and loan and can be as little as 0% (VA loans) or as much as 10% (jumbo loans). However, 3.5% (FHA loans) or 5% (conventional loans) is typical.

Private mortgage insurance (PMI): Your lender might require PMI if your down payment is less than 20% of the purchase price. This requirement protects the lender from potential loss if you default on the loan. Other reasons lenders may require PMI include low credit score, high loan-to-value (the value of the loan is close to the value of the home), or purchases of newly built homes.

Seller closing costs in Massachusetts

On top of a real estate commission, a seller will pay for a real estate attorney, which is required in the state of Massachusetts. The following list of seller closing costs and fees is based on a home selling price of $525,000:

*Example estimate based on a $525,000 median-priced Massachusetts home.

Additional seller costs

Mortgage and liens: You must pay off your existing mortgage at the time of closing. You will also be responsible for any liens against your home, such as unpaid repair or construction fees.

Prorated property taxes: Property taxes average 1.12% in Massachusetts but vary by location and your assessed home value. Since taxes are typically paid in arrears, at closing, you may owe the buyer a prorated amount of the annual tax bill for the amount of time you owned the home.

Outstanding bills/fees: You must pay any final utility bills or fees. Final readings on utilities such as water and sewer, oil, and electricity will be made at closing. You must also pay any outstanding condo or HOA fees for the time you owned the home.

Concessions (optional): The state of Massachusetts allows sellers to pay up to 3% of the buyer’s closing costs. Any concession you agreed on during negotiation will come out of your selling price. Other concessions that may be due at closing might include:

• Home warranty: $264-$1,425
• Homeowner title insurance: 0.23%
• Any HOA or condo fees: $100-$300
• Property taxes
• Cost of repairs or upgrades

How can I estimate my closing costs in Massachusetts?

A buyer’s closing costs in Massachusetts average 2%-3% of the sales price. Based on those ranges, you can get a ballpark idea of what your closing costs might be from the following chart.

Buyers in Massachusetts can get a rough estimate of closing costs by using free online tools such as HomeLight’s Closing Costs Calculator. Other handy tools for calculating your buying expenses include our Home Affordability Calculator and Down Payment Calculator. However, the best way to determine what your closing costs will be in Massachusetts is to partner with a top real estate agent or mortgage advisor.

How can I lower my closing costs in Massachusetts?

There are several ways for buyers and sellers to minimize closing costs, including:

1. Negotiate with the seller to pay your closing costs: In an inventory shortage like we’re still experiencing in 2023, sellers are less likely to agree to pay the buyer’s closing costs. However, Zide explains, it doesn’t hurt to ask. For the seller, it’s all about how much they walk away with.

“If I’m gonna pay ballpark six or seven apples as my seller’s cost and another one or two or three apples for the buyer — and I still can net what I want, and it moves my house — I’ll do it all day long,” he explains.

2. Buy for cash or sell to a cash buyer: A cash buy or sell can eliminate two of the biggest expenses: mortgage fees and commissions. Typically, homeowners who sell to cash-buying companies don’t pay any closing costs.

3. Shop around for a mortgage company or loan: Compare interest rates as well as incentives and closing costs.

4. Shop around for a real estate attorney: According to Zide, buyers and sellers are going to pay high-end rates to real estate attorneys in the Boston metro area. They can save on attorney fees by hiring an attorney in a smaller town. However, he warns, it’s crucial to hire an attorney that specializes in real estate law.

“A corporate attorney, they’ve never seen a purchase and sale agreement in their life,” he explains.

5. Shop around for a real estate agent: Sellers can save on their closing costs by hiring a broker that charges a lower commission rate. Alternatively, some agents may be willing to negotiate a lower commission. For example, a discount brokerage may save the seller 0.5%-1% of the listing commission. However, an experienced local real estate agent that charges full commission is more likely to negotiate the best deal on your behalf.

Zide warns: “If the Realtor cannot negotiate for his own or her own income, then how do you expect them to negotiate to get you the best pricing terms?”

How can I find a top real estate agent in Massachusetts?

HomeLight can connect you with some of the most experienced buyer’s agents in Massachusetts. Simply answer a few questions, and our Agent Match platform will analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.

Additional expert insights about closing costs in Massachusetts

When are closing costs paid in Massachusetts?

• Buyers pay closing costs at closing. It may be paid in a number of ways, including cash, cashier’s checks, or wire transfers. The specific payment method may vary depending on the transaction and the requirements of your lender.
• Sellers pay closing costs at closing as well. However, while the buyer pays their fees out of pocket, the seller’s costs typically come off the top of the transaction. The title or escrow company receives funds from the buyer’s lender and manages the disbursement, paying off the seller’s lender and paying fees to each party. Then the seller receives a check for the remaining balance, which is the net profit.

Can I add closing costs to my home financing?

“The lender will not finance the buyer’s closing costs into the loan. They will not do that. They will allow the seller to pay the buyer’s closing cost of up to three percent,” explains Zide.

Know your closing costs in Massachusetts

In Massachusetts, be prepared to pay 1% closing costs (plus 5%-6% commission and any concessions) if you’re a seller. Massachusetts buyers will pay approximately 2%-3% closing costs (plus a down payment). Knowing what to expect at closing is the best way to ensure that your home-buying or home-selling transaction goes smoothly.

It’s important to work with an experienced local real estate agent who can help you navigate your closing costs and get you the best price. Ready to get started? Get the best deal on your Massachusetts home with a top real estate agent by your side.

HomeLight Home Loans NMLS #1529229 | Equal Housing Lender | NMLSconsumeraccess.org | homelighthomeloans.com/licenses-and-disclosures

Header Image Source: (Michael Denning / Unsplash)