Closing costs are most commonly associated with real estate transactions. These costs can be 3% to 6% of the cost of a house. Common closing costs include loan application fees, prepaid homeowners' insurance, appraisal fee, inspection fees, transfer taxes, escrow fees, attorney fees, recording fees, prepaid interest, prepaid private mortgage insurance, title insurance, and the title search costs. Other costs include the cost of obtaining a credit report, processing fees, courier fees, and paperwork preparation fees. They usually do not include the real estate agent's commission, moving costs, renovations, etc. 

HERE'S HOW SELLER PAID CLOSING COSTS WORK: 

• First, a home buyer and home seller reach agreement on a sale price for a home. It could be any price, so long as there's an agreement. 

• Then, the buyer and seller both agree to raise the sale price of the home above its original level, with the seller agreeing to concede the entire "raised amount" toward the buyer's closing costs at settlement.  

• Sometimes, seller concessions will cover all of a buyer's cost. Other times, it will not. In no circumstance, however, may the amount of seller concessions exceed the amount of closing costs charged to the buyer.  

• The buyer cannot use seller concessions to get "cash back" at closing, for any other purpose than to pay for closing costs shown on the settlement statement.  

• In addition, the seller concession may not be used to compensate for home appliances or roofing in need for repairs; or, to make the buyer's down payment.  

• Seller concessions may only be used to offset buyer closing costs. 

A tip to negotiating for the seller to pay closing costs is to offer to purchase the home for a higher amount, if they agree to pay a certain amount of your closing costs. As an example; let's say you're going to make an offer on a $200,000 property. You can offer $206,000 with $6,000 in seller contributions you can use to pay your closing costs. The extra $6,000 price amounts to a few dollars increase in your payment, but significantly lowers the amount you need to bring to closing. Any seller contributions need to be stated in the purchase agreement. The amount of seller paid closing costs you're allowed to use varies depending on the type of mortgage loan.