How Much Are Closing Costs in New Jersey for Buyers and Sellers?

Closing costs catch a lot of buyers and sellers off guard because they're separate from the down payment and sale price. In New Jersey, both sides have distinct costs to budget for.

Buyer Closing Costs in New Jersey

Buyers typically pay 2% to 3% of the purchase price in closing costs, which usually include:

• Lender fees: loan origination, application, and underwriting fees
• Appraisal fee: typically $500-$700
• Home inspection: typically $400-$700 depending on home size
• Title insurance and search: protects against ownership disputes
• Attorney fees: for contract review and closing representation
• Recording fees: to officially record the deed and mortgage
• Prepaid items: property tax and homeowners insurance escrow, prepaid interest

Seller Closing Costs in New Jersey

Sellers generally pay more in closing costs than buyers, primarily because of two items:

• Real estate commission: typically the largest single cost, paid by the seller
• New Jersey Realty Transfer Fee: a state tax on the sale, calculated on a sliding scale based on sale price, generally amounting to roughly 1% of the sale price for typical Morris County home values, though the exact calculation varies by price tier
• Attorney fees: for contract review and closing
• Outstanding liens or judgments: must be paid off at closing
• Prorated property taxes: for the portion of the year the seller owned the home

The NJ Exit Tax Question

Many sellers ask about the "NJ exit tax." This isn't a separate tax, it refers to an estimated tax payment required at closing for sellers who are no longer New Jersey residents at the time of sale, which is later reconciled on their state tax return. New Jersey resident sellers don't pay this estimated withholding.

How to Estimate Your Total Costs

For buyers, a reasonable planning number is 2-3% of the purchase price in addition to your down payment. For sellers, after commission and the realty transfer fee, many sellers net out somewhere between 7-9% of the sale price in total selling costs, though this varies based on commission rate, mortgage payoff, and any negotiated concessions.

FAQ

Q: What percentage are closing costs for buyers in New Jersey?
A: Buyers typically pay 2% to 3% of the purchase price in closing costs, covering lender fees, title insurance, inspection, appraisal, and attorney fees.

Q: Who pays the realty transfer fee in NJ, the buyer or seller?
A: The seller pays the New Jersey Realty Transfer Fee, which is calculated on a sliding scale based on the sale price.

Q: What is the NJ exit tax?
A: It's not a separate tax, but an estimated tax withholding required at closing from sellers who are non-residents of New Jersey, reconciled later on their state tax return.

Q: Do sellers pay more in closing costs than buyers in New Jersey?
A: Yes, typically, mainly due to real estate commission and the realty transfer fee, both of which fall on the seller.

Want a clearer picture of your specific closing costs as a buyer or seller? Contact Blue Flags Realty for a personalized estimate.