In a Washington home sale, the seller customarily pays the Real Estate Excise Tax, the owner’s title insurance policy, any remaining mortgage balance, and real estate commissions, while the buyer covers lending fees, lender’s title insurance, recording fees, prepaid insurance and taxes, and the home inspection. Escrow fees, prorated property taxes, and notary charges are split between the two sides. That answers the usual question of who pays closing costs in Washington, but the purchase and sale agreement controls, and almost every line item is negotiable. Sellers typically spend 6% to 10% of the sale price on closing costs; buyers usually spend 2% to 5%.
What the Seller Pays
Real Estate Excise Tax
Washington’s Real Estate Excise Tax is the single largest expense most sellers face, and it catches people off guard because it is unusual. Rather than a flat transfer tax, Washington uses a graduated structure that climbs with the sale price, starting at 1.10% on the portion up to $525,000 and rising to 3.00% on the portion above $3,025,000.1Washington Department of Revenue. Real Estate Excise Tax Most cities and counties layer their own local REET on top, commonly 0.25% to 0.50%.2Washington Department of Revenue. Local Real Estate Excise Tax Rates On a $700,000 sale, combined state and local REET can easily exceed $10,000.
The tax has to be paid to the county treasurer before the county auditor will record the deed.3Washington State Legislature. RCW 82.45.090 – Payment of Tax and Fee, Evidence Custom puts REET on the seller, but if the seller does not pay, the buyer becomes legally responsible for it.1Washington Department of Revenue. Real Estate Excise Tax
Owner’s Title Insurance
Washington custom puts the owner’s title insurance policy on the seller. This policy protects the buyer from title defects that existed before the sale, including undisclosed liens, boundary disputes, and recording errors that surface after closing. The premium scales with the sale price and generally runs between a few hundred and a couple thousand dollars.4Office of the Insurance Commissioner. Title Insurance
Mortgage Payoff and Other Liens
If the seller still owes on a mortgage, the payoff comes out of sale proceeds before the seller sees a dollar. The lender issues a payoff statement for the exact amount through the expected closing date, and many lenders charge a small administrative fee for preparing it. Any other liens on file, such as judgment liens or contractor liens, also have to be cleared so the buyer takes unencumbered title.
Real Estate Commissions
Commissions have historically been the largest percentage-based cost for sellers, who funded both their own listing broker and the buyer’s broker. That default shifted in mid-2024. Under updated Northwest Multiple Listing Service rules, buyer broker compensation is now written into the purchase and sale agreement and can be accepted, rejected, or modified by the parties.5Northwest Multiple Listing Service. Northwest Multiple Listing Service Again Updates Rules and Forms to Enhance Transparency and Flexibility for Brokers and Consumers Many sellers still offer to cover the buyer broker’s fee as a marketing move, but the total commission and the split are now openly negotiated. Expect to pay your own listing broker at minimum, with any buyer-side contribution depending on the deal.
What the Buyer Pays
Lending Fees
Lenders charge a cluster of fees to vet the borrower and the property. A credit report runs roughly $50 to $100. An appraisal to confirm the home’s value typically costs $600 to $1,000. A loan origination fee, covering the lender’s administrative work on the mortgage, often lands around 1% of the loan amount, though not every lender charges one. This is worth comparing when you shop for a mortgage.
Lender’s Title Insurance
The buyer pays for a separate lender’s title insurance policy, which protects the lender’s interest up to the loan amount if a title defect emerges later. Lenders almost always require it as a condition of funding.4Office of the Insurance Commissioner. Title Insurance
Recording Fees
The deed and the deed of trust have to be recorded with the county auditor. Washington’s base recording fee is $5 for the first page plus $1 for each additional page.6Washington State Legislature. RCW 36.18.010 – Auditor’s Fees Statutory surcharges for affordable housing and homelessness programs are tacked on per document, so the actual total for recording a deed and deed of trust usually runs a couple hundred dollars.
Homeowner’s Insurance and Prepaid Items
Lenders will not release funds without proof of homeowner’s insurance, and the first year’s premium is normally paid at closing. Buyers also prepay interest for the days between closing and their first full mortgage payment. These prepaid items, together with initial deposits for property tax and insurance, go into an escrow account the lender manages.
Home Inspection
A home inspection is not required by Washington law, but skipping one is a gamble most buyers should not take. A standard inspection on a typical single-family home runs roughly $200 to $500 depending on size and age, and specialized testing for radon, mold, or pests adds to it. The buyer pays the inspector directly, usually well before closing day.
Costs Split Between Both Sides
Escrow Fees
Washington transactions close through an escrow agent, who holds the funds, coordinates signing, prepares the settlement statement, and disburses proceeds. The escrow fee is customarily split 50/50. Depending on sale price and complexity, the total generally lands between $1,000 and $2,500.
Property Tax Proration
Property taxes are divided based on the closing date. The seller covers the portion attributable to their period of ownership, and the buyer takes over from closing forward. If the seller has already paid beyond the closing date, the buyer reimburses them at closing. If taxes are due but unpaid, the seller’s share is deducted from proceeds. Which direction the credit runs depends on when the county has billed the tax year relative to closing.
Notary Fees
Both sides sign documents that require notarization. Washington caps notary fees at $15 per acknowledgment for in-person signings and $25 for remote notarizations.7Washington State Legislature. WAC 308-30-220 Individually small, these add a modest line item to each side’s settlement statement.
How Negotiation Changes the Default Split
The customary allocation above is the starting point, not the rule. The purchase and sale agreement controls, and buyers who are short on cash at closing often ask the seller to cover some of their costs through a seller concession. Concessions show up as a credit on the settlement statement rather than a separate payment, and they are especially common in buyer-friendly markets.
How much a seller can contribute depends on the buyer’s loan type and down payment:
- Conventional loans with less than 10% down: up to 3% of the purchase price
- Conventional loans with 10% to 25% down: up to 6%
- Conventional loans with more than 25% down: up to 9%
- FHA loans: up to 6% of the sale price or appraised value, whichever is lower8U.S. Department of Housing and Urban Development. Seller Concessions and Verification of Sales
- VA loans: up to 4% of the home’s reasonable value, which can include credits toward the VA funding fee and prepaid items9Veterans Affairs. VA Funding Fee and Loan Closing Costs
Concessions that exceed these limits are subtracted from the sale price before the lender calculates the loan-to-value ratio, which can break the deal if the resulting LTV goes past program limits. Any concession terms need to be settled before the escrow company produces the final settlement statement.
Two Tax Issues Sellers Shouldn’t Overlook
Closing costs are not the only money that leaves a seller’s proceeds. Two federal tax questions sit outside the usual closing-cost list but can land in the same settlement.
Capital Gains on an Appreciated Home
If the home has appreciated significantly, federal capital gains tax may apply to the profit. Under Section 121 of the Internal Revenue Code, an individual seller can exclude up to $250,000 in gain from the sale of a principal residence, and a married couple filing jointly can exclude up to $500,000, provided both spouses meet the ownership and use requirements.10Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence Qualifying generally requires having owned and lived in the home for at least two of the five years before the sale. Profit above the exclusion is taxed as a capital gain, and the escrow company or closing agent typically files Form 1099-S with the IRS to report the transaction. For sales of $250,000 or less ($500,000 for a married seller) where the seller certifies the home was a principal residence and the full gain is excludable, the closing agent may not be required to file.11Internal Revenue Service. Instructions for Form 1099-S Proceeds From Real Estate Transactions Track your cost basis carefully and talk to a tax professional if your gain is anywhere near the exclusion limit.
FIRPTA Withholding for Foreign Sellers
When the seller is a foreign person or entity, the Foreign Investment in Real Property Tax Act requires the buyer to withhold 15% of the total sale price and send it to the IRS.12Internal Revenue Service. FIRPTA Withholding That is not a trivial sum. A $600,000 sale produces $90,000 in withholding, held from the seller’s proceeds until the IRS processes the seller’s return and determines the actual tax owed. One exception matters for lower-priced deals: if the sale price is $300,000 or less and the buyer intends to use the property as a personal residence at least 50% of the time during each of the first two years after closing, no withholding is required, and the buyer has to be an individual for the exception to apply.13Internal Revenue Service. Exceptions From FIRPTA Withholding Foreign sellers who expect their actual tax to come in under 15% can apply for a withholding certificate to reduce the amount, but the application needs to go in before closing to avoid having the full amount held.