Tennessee Real Estate Closing Costs Statistics (2023 Survey)
A new RealEstateBees.com survey of over 1,000 active real estate professionals found average closing costs for sellers and buyers in Tennessee.
We reached out to over 1,000 active real estate professionals from Tennessee to collect their insight on the real estate closing costs across the state.
The results are part of the large-scale survey—Nationwide Real Estate Closing Costs Index—conducted by the Real Estate Bees, a leading online real estate platform.
What Is Included in Closing Costs for a Seller in Tennessee?
Costs included in seller’s closing costs most commonly across Tennessee.
What Are Average Closing Costs for a Seller in Tennessee When Selling with a Realtor?
The most common amounts of seller’s closing costs across the state of Tennessee in an agent-assisted sale.
What Are Average Closing Costs for a Seller in Tennessee When Selling 'by Owner'?
The most common amounts of seller’s closing costs across the state of Tennessee in a FSBO sale.
How to Reduce Closing Costs for a Seller in Tennessee?
Since seller closing costs do not revolve around the institution and purchasing of a new loan (that’s the buyer’s responsibility), seller costs revolve more around their obligations to the title company in Tennessee and their respective expenses, and realtor fees.
The only true way to help reduce a seller’s closing costs is to find a way to either sell your property with a realtor who is willing to accept a lesser commission on the sale, or to sell your property without using a realtor at all.
The only way closing costs are reduced is contingent upon the time of the month and year the closing takes place; taxes and insurance are prorated.
Can a Seller Avoid Paying Closing Costs in Tennessee?
Yes! A seller can avoid paying closing costs by only agreeing to sell to a buyer who is willing to cover those costs on the seller’s behalf.
This is most common in transactions that are “all-cash,” and where the buyer is an investor attempting to help a financially strapped or distressed seller to escape a property they are ready to rid themselves of.
Yes, a seller can have the buyer pay for the majority or all of the closing costs associated with a sale.
In the event that a seller cannot afford to pay their share of closing costs, the prospective buyer can offer to pay the seller’s closing costs for them, but in most cases, that’s about it.
Seller’s closing costs are only subtracted from the final net proceeds from the sale of their house, so if a seller finds themself unable to afford paying their share, it means they are also not making any profit on the sale of their home, which is a rare situation.
In this case, the seller can also ask for a personal loan from a friend or family member, but many would advise against this activity, depending on who the personal loan would be coming from, and what the terms of that loan would be.
The buyer can pay for them, or they can come out of the profits of the home sale.
The closing costs can be deducted from the sale profit of the home.
What Is Included in Closing Costs for a Buyer in Tennessee?
Costs included in buyer’s closing costs most commonly across the state of Tennessee.
What Are Average Closing Costs for a Buyer in Tennessee When Buying with a Realtor?
The most common amounts of buyer’s closing costs across the state of Tennessee in an agent-assisted sale.
What Are Average Closing Costs for a Buyer in Tennessee When Buying Without a Realtor?
The most common amounts of buyer’s closing costs across the state of Tennessee in a FSBO sale.
What Are Average Closing Costs for a Cash Buyer in Tennessee When Buying with a Realtor?
The most common amounts of closing costs paid by cash home buyers in Tennessee in an agent-assisted sale.
What Are Average Closing Costs for a First-Time Buyer in Tennessee When Buying with a Realtor?
The most common amounts of a first-time home buyer’s closing costs across the state of Tennessee in an agent-assisted sale.
How to Reduce Closing Costs for a Buyer in Tennessee?
The quickest way to reduce closing costs is for a buyer to quite simply buy a property in Tennessee with cash and avoid instituting a new loan.
Title expenses and other fees assessed by the title company at the time of closing are almost unavoidable, whereas lender fees are completely avoidable, so long as a buyer does not find it necessary to get a loan in order to purchase their desired property.
Negotiate to have the seller pay more for closing costs.
How to Negotiate Closing Costs With a Seller in Tennessee?
Negotiating closing costs with a seller is usually where a realtor can really prove their worth and “earn their keep.”
Depending on the property’s condition, the seller’s motivation, the seller’s timeline, and the prowess of the seller’s realtor, find a good realtor who can effectively help negotiate a more favorable closing cost split on behalf of their buyers.
One of the benefits of using a realtor is they understand basic negotiation tactics and psychology.
If a buyer does not have a realtor working on their behalf, usually one of the most effective methods for getting a seller to agree to contribute toward buyer’s closing costs is to offer a higher price in return for those seller concessions, so that the seller can feel they are getting a fair trade, while the buyer is effectively “rolling in” the closing costs into their loan.
Or, if the buyer is not obtaining a loan on this particular property, they may instead be able to convince the seller to contribute some funds toward buyers’ closing costs in lieu of the fact that they are not paying out any realtor commissions on behalf of an unrepresented buyer.
Use your leverage as a buyer to get a better deal on all closing costs!
Can a Buyer Avoid Paying Closing Costs in Tennessee?
Yes! The seller can agree to pay these fees for you!
Are There Closing Costs Assistance Programs Available for Buyers in Tennessee?
There are indeed closing cost assistance programs available to buyers who utilize certain loan types.
Usually, this involves talking to a Tennessee mortgage broker or lender about the current benefits being offered by government-backed loans such as FHA, THDA, or USDA loans, and seeing how each of the programs differs in their current terms offerings and by neighborhood.
Yes, they can be rolled into the loans.
Who Pays Closing Costs in a Conventional Sale in Tennessee?
Who Pays Closing Costs in a Cash Sale in Tennessee?
Are Closing Costs Negotiable in Tennessee?
What Are the Available Ways to Pay Closing Costs in Tennessee?
Why Are Closing Costs So High in Tennessee?
Closing costs can be high or low, depending on the differences between each home buyer’s/seller’s situation.
The most frequent common denominator for seemingly high closing costs is the presence of a lender in a home sale transaction.
Whenever a buyer is purchasing a home “all cash,” the only fees they actually have to pay at closing are the title company’s fees.
As recently as two weeks ago, I even bought a house with only cash on my own, and my total closing costs were less than a total of $2,500 on an investment property I purchased in Murfreesboro, TN for $217,000.
This is because the vast majority of closing costs, where a buyer is concerned, are only introduced into a transaction when a lender is present.
In order to cover their own profitability, Tennessee real estate lenders must charge a litany of fees upfront for closing.
This can include document fees, fees to the Tennessee real estate appraiser, credit report fees, Tennessee real estate brokerage fees, a certain amount of prepaid taxes or HOA fees paid in advance (depending on the lender), and more.
These costs can add up very quickly, and it’s not uncommon for other less conventional loan types to charge even more fees!
This can be seen with non-traditional loans such as DSCR loans, bank statement loans, and other loan products that are deemed by Tennessee real estate investors to be “riskier” in nature.
It’s for this reason that lenders will also charge extra percentage points upfront when a buyer closes on a property, or orders 2 or more appraisals before wiring the funds to the buyer’s chosen title company, in order to make sure the lender is not overextending themselves with an overvalued asset.
There are a lot of options that can be wrapped into closing costs. There are a lot of moving parts with real estate transactions that create many different potential fees.
Who Pays Closing Costs in a Divorce in Tennessee?
The parties can negotiate this in their settlement agreement, such as a marital dissolution agreement.
Otherwise, who pays closing costs is dictated by the sales contract in the real estate transaction.
It depends. Who pays for items such as closing costs, realtor fees, etc. can all be negotiated.
Typically, those costs are all paid first, and then the parties divide the remaining proceeds from the sale according to an agreed upon percentage.
What Are the Transfer Taxes in Closing Costs in Tennessee?
There are two taxes paid when you close property in TN. Typically, the seller pays the taxes unless negotiated:
1. Realty transfer tax in the form of state tax stamps; and
2. Mortgage tax also paid in state tax stamps
They are calculated at different rates.
Realty transfer tax is imposed on all transfers of real property, with certain exceptions, for having a deed or other instrument that shows proof of transfer record.
The mortgage tax is charged to record the lien or mortgage on the property.
Counties can also impost recording fees and they vary county to county.
Who Pays Transfer Taxes in Closing Costs in Tennessee?
The grantee (buyer) pays the realty transfer tax. In TN, it’s 37 cents for every $100 of indebted property.
So, a property that sells for $100,000 in TN would have the buyer pay $370 in state tax stamps at closing.
The mortgage tax is always paid by the debtor and is charged at $0.115 per $100 of indebtedness.
But the first $2,000 of the debt is exempt from taxation. So, for a $100,000 mortgage recorded in TN, the borrower would pay $112.70 at closing to the state.