Who Pays Closing Costs in Virginia: Buyer vs. Seller Breakdown

In Virginia, who pays closing costs breaks down along predictable lines: sellers absorb the real estate commissions, the state grantor tax, deed preparation, and any regional transportation fees, while buyers handle the financing charges, the recordation tax on the deed and loan, title insurance, and the survey. Combined, both sides on a $500,000 home often spend between $20,000 and $40,000 at settlement, with agent commissions driving most of the seller’s total. Nearly every charge is negotiable up to the moment the purchase contract is signed, and Virginia law lets buyers and sellers reassign tax obligations between themselves by written agreement.1Virginia Code Commission. Virginia Code – Chapter 8, State Recordation Tax – Section 58.1-812

What the Seller Pays

Real estate commissions dominate the seller’s side of the settlement statement. Combined commissions in Virginia average around 5.19 percent of the sale price, split between the listing agent and the buyer’s agent. On a $400,000 home, that is roughly $20,000 or more coming out of the seller’s proceeds before any other deduction. The rate is set in the listing agreement, not by statute, so a negotiated reduction goes straight to the seller’s bottom line.

The seller also pays for the deed that transfers ownership. A settlement agent or attorney drafts it for a fee that usually runs $150 to $300. Any debt secured by the property comes out of the sale proceeds before the buyer takes title, including the remaining mortgage balance, home equity lines, and any judgment or mechanic’s liens on record.

A wood-destroying insect inspection is standard in Virginia. The Department of Veterans Affairs requires it statewide on VA-backed loans, and most regional contracts treat it as a seller expense regardless of loan type.2Department of Veterans Affairs. VA Home Loans – Local Requirements The inspection itself is $50 to $150. Some sellers also offer a one-year home warranty, usually $400 to $700, to help close the deal.

What the Buyer Pays

Most buyer costs trace back to the loan. Lenders charge an appraisal fee, often $450 to $700, to confirm the home’s value supports the loan amount. A credit report fee is smaller; the Consumer Financial Protection Bureau notes it typically runs under $30.3Consumer Financial Protection Bureau. How Much Does It Cost to Receive a Loan Estimate? Loan origination fees and any discount points the buyer purchases scale with the loan amount and the rate being bought down.

Title insurance is the next major buyer line. The lender requires a policy covering its loan, and the buyer pays that premium. A separate owner’s policy is technically optional, but the Virginia State Bar cautions that the lender’s policy only protects the bank; without an owner’s policy, a title defect that surfaces later can wipe out the buyer’s equity with no coverage.4Virginia State Bar. A Title Insurance Guide for the Homebuyer It is a one-time premium paid at closing.

A property survey confirming boundary lines and encroachments typically runs $400 to $800 depending on lot size. The settlement company charges a processing or escrow fee of roughly $400 to $600 for coordinating the closing and distributing funds. Notary charges are modest: Virginia law caps them at $10 per paper notarization and $25 for electronic notarizations.5Virginia Code Commission. Virginia Code 47.1-19 – Fees

How Virginia’s Transfer Taxes Split

Virginia assigns each transfer tax to a specific party by default. Those defaults can be rewritten in the purchase contract if both sides agree.1Virginia Code Commission. Virginia Code – Chapter 8, State Recordation Tax – Section 58.1-812

Grantor Tax (Seller)

The seller pays the grantor tax at $0.50 for every $500 of the sale price or fair market value, whichever is higher. On a $500,000 home, that is $500. Half of the revenue goes to the state and half stays with the locality.6Virginia Code Commission. Virginia Code 58.1-802 – Additional Tax Paid by Grantor; Collection

State and Local Recordation Tax (Buyer)

The buyer pays the state recordation tax at $0.25 per $100 of the purchase price or value, whichever is greater. On a $500,000 purchase, the recordation tax on the deed is $1,250.7Virginia Tax. Rulings of the Tax Commissioner Document Number 25-43 A separate recordation tax at the same rate applies to the deed of trust when the buyer finances, so the combined state recordation tax on a fully financed $500,000 home can reach $2,500.

Every city and county may add a local recordation tax equal to one-third of the state amount, and most do.8Virginia Code Commission. Virginia Code 58.1-814 – City or County Recordation Tax On the same $500,000 example, the local recordation tax on the deed adds roughly $417, with a matching charge on the deed of trust. This local surcharge catches many first-time buyers off guard.

Since July 1, 2024, the recordation tax defines “value of the property” as the most recent local tax assessment at the time of sale. If the purchase price is below the assessed value, the tax is calculated on the assessment.7Virginia Tax. Rulings of the Tax Commissioner Document Number 25-43

Regional Fees in Northern Virginia and Hampton Roads (Seller)

Sellers in certain metro areas pay transportation fees on top of the grantor tax:

A Fairfax County seller could face $1,000 in combined regional fees on a $500,000 sale, plus the $500 grantor tax. Sellers outside these metro areas pay only the grantor tax. All three regional fees can be shifted to the buyer by contract.

Property Tax Proration

Virginia property taxes are paid in arrears, so the seller owes a share of the current year’s bill for the days they owned the home before closing. The title company calculates a daily rate from the most recent annual tax bill, multiplies by the seller’s days of ownership, and credits that amount to the buyer. The buyer then uses that credit when the full bill comes due.

If the current year’s bill hasn’t been finalized at closing, the proration uses the prior year’s figure, sometimes with a small cushion for expected increases. The credit appears on the settlement statement, cutting the buyer’s cash to close and reducing the seller’s net proceeds.

HOA and Condo Resale Disclosure Fees

If the property sits in a homeowners association or condominium, Virginia’s Resale Disclosure Act requires the seller to deliver a resale certificate before closing. The document covers the association’s finances, assessments, rules, and any violations tied to the unit. The seller pays for preparation and delivery.12Virginia Code Commission. Virginia Code – Chapter 23.1, Resale Disclosure Act – Section 55.1-2316

The Common Interest Community Board sets maximum packet fees. Expect several hundred dollars for the initial certificate, with additional charges for expedited delivery. If the buyer requests an updated certificate closer to closing, the requesting party covers that follow-up. Buyers may also see a post-closing fee charged by the association to open their ownership records.

Seller Credits and Concession Limits

A seller credit is the most common way to shift costs at the table. The seller agrees in the contract to pay a set dollar amount toward the buyer’s closing costs, which reduces the cash the buyer brings to closing. The credit shows up on the settlement statement and can be applied to the recordation tax, title insurance, or prepaid escrow items. Any amount above the buyer’s actual closing costs does not come back as cash.

Federal lending rules cap how much the seller can contribute, based on loan type and down payment:

  • Conventional loans: 3 percent of the sale price with a down payment under 10 percent, 6 percent for down payments of 10 to 25 percent, and 9 percent above 25 percent.
  • FHA loans: up to 6 percent of the sale price toward closing costs and prepaids.
  • VA loans: standard costs such as the appraisal, recording fees, and title insurance do not count against the cap. Beyond those, the seller can contribute up to 4 percent of the home’s reasonable value toward items like the VA funding fee, prepaid taxes, and insurance.

In a competitive market, sellers rarely agree to large concessions. In a slower one, a buyer asking for 2 to 3 percent is routine. Whatever is agreed needs to be written into the ratified contract before the lender locks the loan terms.

Protect the Wire Transfer

Wire fraud at closing is one of the most common scams in residential real estate. The usual pattern: a hacker intercepts email traffic between the buyer and the settlement company, then sends fake wiring instructions that route funds to a criminal account. Once the money moves, recovery is extremely difficult.

Before wiring, call the settlement company at a phone number you obtained independently, not from an email, and verify the wiring instructions by voice. Ask your bank to confirm the name on the receiving account matches the title company before releasing the funds. Last-minute changes to wiring instructions sent by email are almost always fraudulent. A few hours after sending, call the settlement agent to confirm the money arrived.