In a Georgia home sale, both the buyer and the seller pay closing costs, but they pay for different things. Buyers cover the costs tied to getting the mortgage and protecting the title, typically 2% to 5% of the loan amount. Sellers cover the real estate commissions, the state transfer tax, the payoff of any existing mortgage, and the deed work needed to hand over clean title. Each side also pays its own closing attorney, because Georgia is one of the states that requires a licensed attorney to run the closing.
What the Buyer Pays
Most of a buyer’s closing costs come from the loan. Lender fees for origination, underwriting, and processing compensate the mortgage company for evaluating and packaging the loan. An appraisal is required on nearly every residential mortgage because the lender needs to confirm the property is worth the loan amount. A home inspection is not legally required, but most buyers pay for one to check the condition of the house before committing.
Title insurance is the next big line item. A lender’s title policy is mandatory on any financed purchase; it protects the mortgage company if a title defect surfaces later. An owner’s title policy is optional and protects the buyer’s own equity against the same risks. A survey fee may be added if the lender or buyer wants a current map of the property lines.
Recording fees go to the county clerk for entering the new deed and the security deed in the public land records. They vary by county and are modest compared to the other costs.
The buyer also funds the initial escrow account for property taxes and homeowners insurance. The lender collects several months of these payments upfront so the escrow has a cushion when the first bills come due. This often surprises first-time buyers because it can add a few thousand dollars to the amount owed at closing.
Add it all up, and buyers in Georgia generally see closing costs in the range of 2% to 5% of the mortgage amount, depending on the loan type, the lender, and the required prepaid items.1Fannie Mae. Closing Costs Calculator
What the Seller Pays
The seller’s biggest cost is usually the real estate commission. In Georgia, the combined commission for the listing and buyer’s agents averages about 5% to 6% of the sale price, though the rate is negotiable. On a $375,000 home, that is roughly $19,000 to $22,500, typically split between the two brokerages.
Before title can transfer, the seller must pay off any existing mortgage, home equity line, or other lien on the property. The closing attorney handles this by collecting the payoff figure from the lender and making sure the old security deed gets cancelled. If the original loan carries a prepayment penalty, that comes out of the seller’s proceeds too.
The seller pays attorney fees for preparing the warranty deed that transfers ownership to the buyer. The seller also pays the Georgia real estate transfer tax and contributes a prorated share of the year’s property taxes for the time they owned the home.
The Attorney Requirement and Who Pays for It
Georgia law defines “conveyancing” as the practice of law, so preparing deeds, reviewing title work, and running a real estate closing can only be done by a licensed Georgia attorney. The Georgia Supreme Court has reinforced this through formal advisory opinions, holding that nonlawyer signing agents cannot oversee the execution of deeds and that an attorney must be physically present at every closing.2Justia Law. Georgia Code 15-19-50 – Practice of Law Defined
Both sides pay for attorney services, and the fees cover different work. The seller’s attorney fees typically go to preparing the warranty deed and related transfer documents. The buyer’s attorney fees cover the title search, preparation of the closing package, and oversight of the lender’s requirements. Attorney fees for a residential closing in Georgia generally run $500 to $1,500 per side, with complex transactions pushing higher.
Georgia Transfer Tax
Georgia charges a transfer tax every time real property changes hands for more than $100. The rate is $1 for the first $1,000 of the sale price, plus $0.10 for each additional $100.3Justia Law. Georgia Code 48-6-1 – Transfer Tax Rate On a $350,000 home, the tax is about $350.
By statute, the seller is liable for the transfer tax, though the parties can agree in the purchase contract to shift it to the buyer.4Georgia Department of Revenue. Real Estate Transfer Tax In most Georgia deals, the seller pays it as a matter of local custom. The tax is paid to the clerk of the superior court when the deed is recorded.
Several transfers are exempt, including gifts, transfers between spouses in a divorce, foreclosure deeds, and transfers to or from government entities.5Justia Law. Georgia Code 48-6-2 – Exemption of Certain Instruments From Tax When an exemption applies, the closing attorney notes it on the deed.
Georgia Intangible Recording Tax
Any buyer who finances the purchase also owes the Georgia intangible recording tax. The rate is $1.50 for each $500 (or fraction of $500) of the loan’s face amount, with a maximum of $25,000 on any single note.6Justia Law. Georgia Code 48-6-61 – Filing Instruments Securing Long-Term Notes That comes out to $3 per $1,000 borrowed. On a $300,000 mortgage, the tax is $900. On a $400,000 mortgage, it is $1,200.
The tax is technically imposed on the note holder, meaning the lender. Georgia law allows the lender to pass it on to the borrower, and lenders do so universally.6Justia Law. Georgia Code 48-6-61 – Filing Instruments Securing Long-Term Notes The security deed cannot be recorded until the tax is paid, and failing to pay within 90 days triggers a 50% penalty plus 1% monthly interest.7Georgia Department of Revenue. Intangible Recording Tax Cash buyers skip the tax entirely, since there is no mortgage to record.
How Property Taxes Get Split
Georgia property taxes run on a calendar year, January 1 through December 31, but counties generally don’t issue the bills until the fall. The closing attorney bridges that gap through proration.
If you close in the spring or summer before the bill arrives, the seller credits the buyer for the portion of the year the seller owned the home. When the bill comes in the fall, the buyer pays the full amount, having already collected the seller’s share at closing. If you close after the seller has already paid that year’s bill, the buyer reimburses the seller for the days from closing through December 31. The attorney divides the annual tax by 365, multiplies by each party’s days of ownership, and shows the result as a credit or debit on the settlement statement.
Shifting Costs Through Seller Concessions
The purchase and sale agreement controls the final allocation of every closing cost. Anything described as customary can be shifted to the other party if both sides agree. The most common tool is a seller concession, where the seller contributes a fixed dollar amount or percentage toward the buyer’s closing costs.
Concessions appear as credits on the buyer’s Closing Disclosure and directly reduce the cash the buyer brings to closing. They can cover origination fees, prepaid taxes and insurance, title charges, and discount points. They cannot be applied toward the down payment.
The maximum concession depends on the loan type and the buyer’s down payment:
- Conventional loans on a primary residence or second home: 3% with less than 10% down, 6% with 10% to 25% down, and 9% with 25% or more down. Investment properties are capped at 2% regardless of the down payment.8Fannie Mae. Interested Party Contributions (IPCs)
- FHA loans: up to 6% of the sale price, regardless of down payment. Any amount beyond actual closing costs triggers a dollar-for-dollar reduction in the appraised value used to size the loan.9HUD. What Costs Can a Seller or Other Interested Party Pay on Behalf of the Borrower
- VA loans: up to 4% of the sale price for concessions beyond normal closing costs, such as paying off the buyer’s debts or funding the VA funding fee.
For conventional loans, the percentage is calculated from the lower of the sale price or the appraised value, not the loan amount.8Fannie Mae. Interested Party Contributions (IPCs) If the home appraises below the contract price, the concession shrinks with it.
Extra Withholding for Out-of-State and Foreign Sellers
A seller who lives outside Georgia faces an additional deduction at closing. The buyer is required by law to withhold 3% of either the sale price or the seller’s gain and remit it to the Georgia Department of Revenue. If 3% of the full price would exceed the seller’s actual tax, the seller can file an affidavit swearing to the gain amount, and the buyer withholds 3% of that smaller figure.10Justia Law. Georgia Code 48-7-128 – Withholding Tax on Sale or Transfer of Real Property by Nonresidents
Withholding does not apply when the property is the seller’s principal residence, when the transfer is a foreclosure or deed-in-lieu, or when a government entity is involved.10Justia Law. Georgia Code 48-7-128 – Withholding Tax on Sale or Transfer of Real Property by Nonresidents A buyer who fails to withhold becomes personally liable for the tax, so closing attorneys confirm the seller’s residency before disbursing funds.
Foreign nationals selling U.S. real estate face a separate federal withholding under the Foreign Investment in Real Property Tax Act. The standard rate is 15% of the gross sale price. A reduced rate of 10% applies when the property sells for $1,000,000 or less and the buyer intends to use it as a personal residence. For properties selling below $300,000 where the buyer will live in the home, no withholding is required.11Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests The federal and state withholdings can stack, so a foreign seller who also lives out of state could see both deducted.
Reviewing the Closing Disclosure Before You Sign
Federal law requires the lender to deliver the Closing Disclosure to the borrower at least three business days before closing.12Consumer Financial Protection Bureau. What Should I Do if I Do Not Get a Closing Disclosure Three Days Before My Mortgage Closing Use that window. The disclosure lists every fee, shows who pays it, and itemizes credits for seller concessions, prorated taxes, and earnest money. The seller receives a separate version showing their side of the ledger, but the three-day rule applies only to the buyer. If a number looks wrong, raise it before closing. Fixing an error on the settlement statement is far easier than chasing it down after the deed is recorded.