What are "closing costs" associated with in real estate?

Closing costs refer to the various fees and expenses that must be paid when finalizing a real estate transaction. These costs encompass a wide range of items, including mortgage application fees, title insurance, appraisal fees, attorney fees, and possibly property taxes. Understanding these costs is crucial for buyers and sellers, as they can significantly impact the financial aspect of a real estate deal.

The correct response accurately captures the essence of closing costs by highlighting that they are directly associated with the completion of a real estate transaction. This includes necessary expenses that ensure the property is legally transferred from the seller to the buyer.

In contrast, the other options present different aspects of real estate transactions that do not fall under the definition of closing costs. Advertising costs are related to marketing the property, fees charged by agents pertain to their professional services rather than transaction finalization, and the difference between listing and selling prices indicates market dynamics but does not relate to the necessary closing expenses incurred at the time of sale.