Who Pays Closing Costs in Illinois: Transfer Taxes and Proration

In Illinois, both the buyer and the seller pay closing costs, but the seller usually pays more. The question of who pays closing costs in Illinois comes down to a customary split: sellers cover real estate commissions, the owner’s title policy, and state and county transfer taxes, while buyers cover the lender’s charges, inspection, and the prepaid escrow items their mortgage requires. Excluding commissions, sellers generally spend about 2% to 3% of the sale price; buyers spend 2% to 5%. Commissions alone add another 5% to 6% on the seller’s side.

Every item below is customary, not mandatory. Your purchase contract controls, and nearly every charge can be shifted to the other party by agreement.

What the Seller Pays

The biggest line on the seller’s side is the real estate brokerage commission. Rates are negotiable; the national average sits near 5.5% of the sale price, split between the listing agent and the buyer’s agent. The commission comes out of sale proceeds at closing rather than out of pocket.

In most Illinois counties, the seller also pays for the owner’s title insurance policy, which protects the buyer against future claims on the property’s ownership history. Premiums vary with sale price and often fall between $1,500 and $3,000 on a typical home. The party paying for title insurance has the right to choose the title company.¹

Sellers pay their own attorney to review the contract, clear title issues, and oversee the closing. Attorney fees for a standard residential sale generally run $500 to $1,000, more for complex transactions. Other seller-side items:

Mortgage payoff: the remaining loan balance plus per-day interest accrued since the last payment, paid from proceeds.
Recording fees for lien releases: roughly $50 to $100 per document, depending on the county.
State and county real estate transfer taxes: by custom, the seller’s responsibility, totaling $1.50 per $1,000 of sale price.
Property tax proration credit to the buyer, covering the portion of the tax year the seller occupied the home.

What the Buyer Pays

Most buyer closing costs are tied to the mortgage. Lenders charge a loan origination fee, often 0.5% to 1% of the loan amount. An appraisal runs roughly $400 to $600. Credit report fees are generally under $30.²

Buyers pay for the lender’s title insurance policy, which protects the mortgage company’s interest in the property and is separate from the owner’s policy the seller provides.¹ A home inspection, usually $325 to $425, is another buyer expense and is often paid before closing day. Buyer-side legal representation runs roughly $500 to $900.

Smaller buyer items include:

Recording fees for the new deed and mortgage: roughly $80 to $170, depending on the county and page count.
Notary fees, capped by Illinois law at $5 per signature for in-person notarization and $25 for electronic notarization.³
Wire transfer and courier fees, generally under $50 combined.

Escrow and Prepaid Items the Buyer Funds

On top of the fees above, most lenders require the buyer to fund an escrow account at closing to cover future homeowners insurance and property tax payments. You will typically prepay 12 months of homeowners insurance upfront, plus two to three months of insurance and property tax reserves to seed the account. Depending on when you close relative to the next property tax due date, the lender may collect several additional months of taxes in advance.

These prepaids can add thousands of dollars to the buyer’s cash at closing. On a $300,000 home with $6,000 in annual property taxes and $1,500 in annual insurance, prepaids alone might run $3,000 to $5,000, separate from closing fees and the down payment.

Transfer Taxes: Who Pays at Each Level

Illinois imposes a state transfer tax of $0.50 per $500 of sale price on all real estate transfers.⁴ Counties may add $0.25 per $500.⁵ Combined, that is $1.50 per $1,000 of value. On a $300,000 sale, state and county taxes total $450. By long-standing custom, the seller pays both.

Chicago

Chicago layers its own transfer tax on top at a combined rate of $5.25 per $500, and this one is split. The buyer pays $3.75 per $500 (the base city portion), and the seller pays $1.50 per $500 (a supplemental tax funding the Chicago Transit Authority).⁶ On a $300,000 Chicago home, the buyer owes $2,250 and the seller owes $900 in city transfer taxes, in addition to the $450 state and county total.

Suburbs

Many suburbs impose their own transfer taxes, and who pays depends on the municipality. Some place the charge on the buyer, some on the seller, and some split it. Rates generally run from $3 to $10 per $1,000 of sale price. Confirm the rate and the responsible party with your attorney or agent for the specific municipality.

Property Tax Proration

Illinois property taxes are paid in arrears, meaning the bill a buyer receives after closing partially covers months when the seller still owned the home.⁷ To account for that, the seller gives the buyer a proration credit at closing.

Because the future tax bill is unknown on closing day, the parties estimate it. Standard Illinois practice is to calculate at 105% to 110% of the most recent full tax bill, building in a cushion. If the last annual bill was $6,000 and the parties agree to 105%, the baseline becomes $6,300, divided by 365 for a daily rate, then multiplied by the days the seller owned the home during the current tax year. The credit reduces the buyer’s cash due at closing and reduces the seller’s net.

Neither 105% nor 110% is required by law; the exact percentage is negotiated in the purchase contract. Some contracts also include a re-proration clause that adjusts the amount once the actual bill arrives, but not every deal does.

Negotiating the Split and Seller Concessions

Nearly every closing cost can be reassigned in the contract. A seller who wants a fast sale may agree to pay part of the buyer’s costs; a buyer competing for a popular listing may offer to cover items usually paid by the seller. The main constraint is the buyer’s lender, which caps how much a seller can contribute toward buyer closing costs. The limits apply to the lower of the sale price or appraised value:

Conventional loans (Fannie Mae): 3% with less than 10% down, 6% with 10% to 25% down, 9% above 25% down.⁸
FHA loans: up to 6% regardless of down payment.
VA loans: no cap on seller-paid closing costs, but seller concessions (extras like paying off the buyer’s debts or prepaying hazard insurance) are capped at 4% of the home’s reasonable value.⁹
Investment properties (conventional): 2% maximum.

Contributions above these caps are treated as reductions to the sale price, which can affect the appraisal and loan approval. If you plan to ask the seller to cover costs, confirm the applicable cap with your lender first.

Condo-Specific Charges

If the property is a condominium, the seller must obtain a disclosure package from the association and provide it to the buyer before closing. Under the Illinois Condominium Property Act, the package includes the declaration, bylaws, financial statements, reserve fund status, pending litigation, insurance coverage, and any unpaid assessments, and the association must deliver it within 10 business days of the seller’s written request.¹⁰

The association can charge the seller up to $375 for the package, plus $100 for rush service within 72 hours; the $375 figure is adjusted periodically for inflation.¹⁰ Some management companies also charge the buyer a separate move-in or transfer fee of $100 to $500. Spell out responsibility for each of these in the purchase contract.

1
Illinois Department of Financial & Professional Regulation. Title Insurance Section
2
Consumer Financial Protection Bureau. How Much Does It Cost To Receive a Loan Estimate?
3
Illinois General Assembly. Illinois Notary Public Act – 5 ILCS 312/3-104
4
Illinois General Assembly. 35 ILCS 200 Property Tax Code – Article 31, Real Estate Transfer Tax Law
5
Illinois Department of Revenue. Real Estate Transfer Tax Stamp Purchase Forms/Procedures
6
City of Chicago. Real Property Transfer Tax (7551)
7
Cook County Treasurer’s Office. Why We Pay Property Taxes in Arrears?
8
Fannie Mae. Interested Party Contributions (IPCs)
9
U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
10
Illinois Department of Financial and Professional Regulation. Illinois Condominium Property Act