Closing Costs In Philadelphia, PA (2024 Buyer’s & Seller’s Guide)

Let me guess: you’re “under contract”.

Congrats!  Believe me, I know how long it can take just to get that far.

closing costs philadelphia pa

Now, you’re digging into the details.  It’s all hands on deck.

First order of business: closing costs.

What are they?  How much will I owe?  Do we split them evenly?  How can I reduce the total costs?

Every buyer and seller that walks out of the title agency’s office after settling on a home in Philadelphia says the exact same thing:

Why are closing costs so much?

I know this because I’m a cash house buyer in Philadelphia.  Meaning, I’m usually on one side of the closing table and constantly saying the same thing myself or hearing it from others. 

Depending on the location and sale price of the home, it can be a large chunk of change in closing costs. 

So, with that being said, get ready to whip out your checkbook Philadelphian’s.

what are typical closing costs in philadelphia

Closing costs in Philadelphia, which can range from 4% to 6% of the home’s sale price, are completely unavoidable if you want to transact in a legal and aboveboard fashion. 

There is no avoiding them – because doing so means breaking the law.

The purpose of this article is to coach all of you last minute researchers through each closing cost so that you can confidently sell your house in Philadelphia (or buy a new one!).  Let’s not make it an awkward or nerve wracking experience at the closing table.

I get it.  I was once in your shoes.

You’ve saved up for the down payment and found your dream home, only to discover you owe thousands more in closing costs – sometimes more than your down-payment itself. 

Or worse, you show up as the seller expecting to get one big fat check and then see just how much of that gets absorbed into your closing costs.

We’re going to cover everything you need to know related to closing costs in Philly—whether you’re a buyer, seller, or investor—so you can plan ahead and save big.

We’ll discuss: transfer taxes, title insurance and ways to offset these costs.  

Plus, we will dive right into all of those miscellaneous line items that your realtor or lender forget to explain to you beforehand. 🤨

Ready to dive in? Let’s talk numbers, strategies, and how you can minimize those dreaded closing costs. You’ll be glad you did!


What Are Closing Costs?

The best way to think about closing costs is to bucket your home purchase into two categories:

  1. The offer price
  2. Everything else

The “everything else” bucket means everything outside of or in addition to the actual offer price.  This bucket is going to represent your closing costs. 

Closings costs in Philadelphia might be higher than the national average, but they are required to finalize all real estate transactions in the city.  In this guide, you’ll see how they can fluctuate, up and down, based on the subject property, location, lender and many other variables.

real estate closing costs philadelphia

With Philadelphia’s closing costs averaging between 4% – 6%, you can be sure that this is a serious and focused topic among many buyers and sellers in the city of brotherly love.  We’re talking a total of $18,000 being at stake on a $300,000 sale – this is nothing to take lightly.

Closing Cost Calculator PA Seller - True Cost of Selling Your Home

To many, closing costs are just part of the real estate game.  Some people think of them as “extra fees”, kind of like sales tax when you buy a soda at the grocery store. 

However, they do serve a purpose.

Buying a soda at the bodega is rather harmless, but closing costs on a real estate transaction ensure that the deal is legally binding and financially sound.

How so?

The costs you pay at the closing table in Philadelphia include transfer taxes, which register and record the new deed on the settled transaction with Philadelphia County.  Another common closing cost is title insurance, which verifies ownership and protects you from future disputes. Whether you’re buying or selling, it’s crucial to understand what’s involved.


Key Components of Closing Costs for Buyers in Philadelphia

Philadelphia homebuyers face a variety of closing costs, some of which can come as a surprise. Here’s a breakdown of the most common and significant ones:

1. Realty Transfer Tax

You’re going to want to pay attention to this cost, because it is the biggest of them all. 💰

In Philadelphia, the combined state and city tax rate is a whopping 4.278%. The only other PA metro that comes in hotter than this one is Pittsburgh – with a whopping 5%! 

Don’t panic though, as this cost is typically split between the buyer and seller.  Paying 2.139% each is not as bad, but still hefty. However, if you’re purchasing a foreclosure in Philadelphia or a probate house for sale in Philadelphia, then you may be on the hook for the full amount. 

2. Title Insurance

Your lender will require title insurance.  Full stop.  You cannot avoid this.

Also, you cannot negotiate the title insurance down to a lower rate as these fees are fixed.

This insurance protects you and your newly acquired home against claims on the property’s ownership history, so, it won’t be cheap.

Title insurance for buyers in Philadelphia averages between 0.50% and 0.75% of the purchase price.

While it is a steep cost, without it your lender won’t approve the loan, and you could be left vulnerable to legal issues.

It’s best to just bite the bullet on this one and pay up.

3. Loan Origination & Underwriting Fees

Getting a new loan to purchase a home isn’t free either.

Mortgages involves more than just a credit check and income verification.

There are origination and underwriting fees, which can easily amount to 0.5% to 1.0% of the loan.  I know what you might be wondering:

What do these fees actually cover?

The best way to think about this is to contemplate all of the bank’s employees who draw up the loan documents, reserve the funding and tackle the bank’s administrative work to get the deal over the finish line. Labor and meticulous work like that is not cheap.  And that’s really what you’re paying for at the end of the day.

Do you also see a “lender fee” or “processing fee” on your closing estimates?  Try to negotiate that away with you loan officer.  It’s often snuck in there last minute but totally unnecessary for you to pay.

4. Appraisal Fee

And with a new mortgage always comes an appraisal.

Lenders order appraisals on every home they lend on.   They do this as a safeguard so that the home is worth the purchase price at a minimum. 

The last thing you, as the buyer, and your lender want is closing on a home for more than it’s actually worth.   

Appraisals in Philadelphia often run anywhere from $400 to $800. More likely than not, you won’t have a chance to shop around for a lower price since your lender is the one requesting it.

5. Home Inspection

Of all the closing costs in Philadelphia that you can avoid, this one is the most common.

Many buyers, especially in a “sellers market”, will waive their inspection contingency and avoid doing a home inspection altogether.

Here’s some advice:

You can waive the inspection contingency to be more competitive, but do the inspection anyways.  Sure, you’ll pay out of pocket for this, but it’s always better to be safe than sorry.

The last few home inspections I hired out went for $725 each.  

And that’s the full gamut which checks for:

  1. Radon
  2. Foundation issues
  3. Knob & tube wiring
  4. Asbestos
  5. Mold
  6. Leaky roof
  7. Water damage
  8. Lead paint
  9. And so on…

6. Homeowner’s Insurance

Lastly, it wouldn’t be a new home without home insurance.

And by the way, if you were wondering:

No, your lender won’t let you purchase the home without home insurance.  That would be an awful idea! It’s an absolute requirement for the deal to be funded.

The closing cost for homeowners insurance in Philadelphia is typically a pro-rated advancement of the annual premium.  This can range from $750 to over $2,000 annually, depending on the coverage and property condition.  You’ll be responsible for 3 – 6 months upfront.


Key Components of Closing Costs for Sellers in Philadelphia

Good news, sellers!  Compared to buyers, when you sell your house in Philadelphia you typically have less cost components to think about.

While that is true most of the time, it’s always good to come prepared anyways.

Let’s cover a few of the common closing costs for homeowners in Philadelphia.

1. Seller Agent Commission

Unless you sold your house to a friend or relative, it’s very likely that you hired a real estate agent to help sell your house.

Did you know that it’s becoming more and more common to sell your house by owner (i.e., without a realtor).  You can save thousands of dollars in commissions and also expedite the entire process.

In Philadelphia, a good agent will charge your 4% – 5%, but a great agent will cost you closer to 6%.

closing costs in philadelphia pa

Agent commissions used to be a closing cost that was split evenly between buyers and sellers. 

However, in 2024, a law was passed that actually ended that practice and put the decisioning into the seller’s hands.

So, at the end of the day, if your agent is not helping you sell your house faster or for a higher price, what incentive do you really have to hire and pay for them?

Forking over 5%- 6% is quite a bit. 

Contact Signature Properties if this is something you’re currently struggling with.

My team and I can give you a cash offer with ZERO closing costs. 

You can start that process below:

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2. Transfer Taxes

Just like buyers, sellers are typically responsible for half of the 4.278% realty transfer tax in Philadelphia.  Unless otherwise negotiated, the majority of transactions split this amount evenly.  

Keep in mind, this cost is legally borne to the seller of the home – therefore you should tread lightly as you negotiate with your buyer since they do not have a legal requirement to pay it (unless already agreed to in a purchase and sale contract).

3. Prorated Taxes and Utilities

All of the monthly and annual costs you’ve been covering while owning your home are now going to transfer to the new buyer.  And part of that transfer means settling up on things already paid for or past due.

At closing, the seller is responsible for prorated property taxes and any unpaid utilities. This is computed by the title agency as of the closing date.  This way, it guarantees the buyer starts fresh with no outstanding bills, property liens or arrears attached to the home.

4. Title Company Fees

This last one is is often missed by many of us:

The title company.

Yes, that’s right, the people doing all the transaction coordination and title work.  They need to get paid!

After all, they don’t just do all of this for free.

While buyers pay for title insurance on the real estate itself, sellers are often responsible for fees related to the title transfer, title search and any potential remediation.

Title agencies do hundreds of different tasks leading up the closing date.  This could include fees related to deed recordings, notaries, and any other administrative charges.

All in all, it’ll run you about $500 -$1,000 in Philadelphia for a reputable and top-notch title servicer.


Average Closing Costs for Buyer’s in Philadelphia: Buyer Example

Now that we know what each of the cost components are when you purchase real estate in Philadelphia, let’s put it all into perspective.

The average home price in Philadelphia is $300,000 (at the time of this publication – late 2024).

If you are under contract to purchase a new home in the city of brotherly love and you plan to finance the purchase with 20% down (down payment not included in costs below), then these are your estimated closing costs:

  • Realty Transfer Tax: $6,417 (split with seller)
  • Title Insurance: $1,500
  • Loan Origination Fees: $1,200 to $2,400
  • Appraisal Fee: $500
  • Home Inspection: $500
  • Homeowner’s Insurance: $1,200
  • Total: ~ $11,500 to $12,500

Average Closing Costs For Seller’s in Philadelphia: Seller Example

Now, on the other end of this hypothetical transaction, let’s take a look at the seller’s side.

For the same $300,000 home, the seller would be on the hook for:

  • Realty Transfer Tax: $6,417 (split with buyer)
  • Agent Commission: $15,000 to $18,000
  • Title Transfer Fees: $500
  • Prorated Property Taxes/Utilities: ~$1,000
  • Total: ~$22,000 – $24,000

How to Offset Closing Costs

Closing costs don’t have to drain your savings if you’re the seller.  

And if you’re the buyer, isn’t a 20% down payment going to hit you fairly hard anyways?

how much will i pay in closing costs in philadelphia

There are a few savvy ways to offset these cumbersome expenses before you get to the closing table:

1. Buyer Commission Rebates

In Philadelphia, commission rebates may be available from low-cost brokerages. 

Here’s how it works: Certain brokers may offer buyers a fixed percentage as cash back on the purchase price.  This is basically a concession or rebate on their overall commission.

Given the change in commission structures across the US, this little trick might be one that eventually goes away – so strike while the iron is hot!

2. Seller’s Assist

A “seller’s assist” allows the buyer to request that the seller cover a portion of their closing costs.

Wait a second, isn’t this just robbing Peter to pay Paul? 

While that’s true, in a competitive market this can be a tricky negotiation tactic for buyers.

However, for sellers who want a no-nonsense sale without any added costs, you likely won’t find them negotiating an assist like this.

3. Rolling Fees into Your Mortgage

Some lenders allow buyers to roll certain closing costs into their mortgage. This means you’ll pay less upfront, but you’ll incur interest on those fees over time.

It’s not a strategy I can recommend as it typically means the buyer is biting off more than they can chew.

Think about the long-term cost of this option and use it sparingly.

4. Sell Your House To A Home Buying Company

Many homeowners don’t know this little trick, but you don’t have to sell your house the traditional way with a realtor.  Instead, you can go directly to a company that buys houses in Philadelphia and ask them to purchase your home. 

More often than not, they can put an offer together that covers all of your closing costs – yes, you read that correctly: $0 closing costs.

This means:

  • $0 in realtor commissions
  • $0 in transfer tax
  • $0 in title fees
  • $0 in pro-rated taxes, utilities and other fees

If you want to sell your house without a realtor or any other fees then get started below:

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Frequently Asked Questions: Philadelphia Closing Costs

Closing costs can feel like an unwelcome surprise on a major life event that should be relished and enjoyed.  After all, it’s not every day that you get to sit at the closing table and make it happen!

average closing costs in philadelphia

In reality though, these costs are a necessary part of any real estate transaction.

Whether you’re a buyer or a seller, going into the closing with background and knowledge on these costs can help you avoid last-minute stress and allow you to budget properly.

Remember, there are ways to minimize these expenses.  You will need to start now though, because once you get to the closing table it is often too late.

By planning ahead and discussing options with your realtor, lender or home buyer, you’ll be prepared to handle closing costs without breaking a sweat. And when the day comes to sign those papers, you’ll do it with confidence, knowing exactly what you are paying for.

Do you still have some questions or concerns about closing costs in Philadelphia?  A lot of folks do.

These are the most common closing costs questions we see while doing business in Philadelphia.

Question: What is included in closing costs for buyers in Philadelphia?

Answer: Philadelphia buyers can expect to pay for several key services in their closing costs, including the realty transfer tax (typically split with the seller, 50-50), loan origination and underwriting fees (varying by lender), title insurance, appraisal fees, home inspection costs, and homeowner’s insurance premiums. Summing it all up usually results in ~4% to 6% of the home’s purchase price. Buyers should consider this added amount, in addition to any down-payments, when shopping for homes and evaluating their budget.

Question: How can I reduce my closing costs?

Answer: There are a few strategies to lower your closing costs. One effective way is to ask for a commission rebate from your real estate agent, where part of their commission is refunded to you. Or you can just skipping paying for an agent overall.  Another option is to negotiate for a seller’s assist, where the seller covers part of your closing costs.  This works for buyers, but not every seller will accommodate.  There are certain closing costs you can shop around for.  Those being title insurance, home inspections, and other miscellaneous fees.  Your CD or closing disclosure, will list what closing costs you can shop for.

And lastly, in certain cases, lenders will allow you to roll certain closing costs into your mortgage.

Question: Are closing costs negotiable in Philadelphia?

Answer: Yes, everything is negotiable in real estate!  Closing costs in Philadelphia are no exception.  While the closing costs themselves may be negotiable between buyers and sellers, the actual costs must always be paid to the county, title companies, lenders, insurers, etc. 

Said differently, there is no escaping realty transfer tax in Philadelphia, as painful as that one is!

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Author: Doug Greene

Doug Greene is no stranger to all topics real estate and business. For over a decade he has been educating others and helping homeowners navigate difficult, complex problems with their property.

His work has been featured in the NY Times, Washington Post, Realtor.com, Apartment Therapy, HomeLight, Homes & Gardens and many more.