Alabama Real Estate Practice Exam

In real estate transactions, what typically comprises closing costs?

1. Inspection fees, survey fees, and property taxes

2. Only the agent's commission

3. Down payment on the property

4. First month's mortgage payment

The correct answer is: Inspection fees, survey fees, and property taxes

Closing costs are expenses that are due at the time of closing a real estate transaction. These costs typically include fees, taxes, and other expenses incurred during the transaction. While options B, C, and D may also be included in the final costs, they do not typically comprise the entire amount of closing costs. Option B only mentions the agent's commission and does not include other necessary fees such as inspection and survey fees. Option C only mentions the down payment on the property, which is a separate cost from closing costs. Option D only mentions the first month's mortgage payment, which is also a separate cost from closing costs. Therefore, option A is the most accurate answer as it includes the most common expenses that are considered closing costs.