When you buy a house, there are more costs than the down payment and the mortgage. And when you sell a house, there are costs then, too. A buyer has to pay fees at closing, and a seller has to pay agent commissions at closing. Understanding closing costs can’t prevent surprises and unexpected financial challenges at closing. So here’s a breakdown of closing costs for buyers and sellers in San Bernardino, Riverside, and San Diego Counties.
What Are Closing Costs for Buyers and Sellers?
Many people aren’t aware that there are closing costs for both buyers and sellers in San Bernardino, Riverside, and San Diego Counties. These closing costs are fees that cover the costs of finalizing the mortgage. As the term suggests, these fees are paid at closing – that last step in the transaction when the property title is actually transferred to the buyer.
The bulk of the closing costs are paid by the buyer, but the seller will pay closing costs too, usually the agent’s commission. You can, however, get a good idea of what your closing costs will be by checking out the Loan Estimate, which details these costs and must be provided by the lender within three days of receipt of your application.
What Is Included in Closing Costs for Buyers and Sellers?
Closing costs are determined in part by where the property in question is located, the type of home, and the type of loan. Typically, though, closing costs include the following property-related costs, loan-related costs, and insurance-related costs:
- Appraisal fee
- Inspection fee
- Escrow fees
- Flood certification
- Property tax
- Annual assessments (when HOA fees apply)
- Title fees
- Attorney fees
- Lender fees
- Loan origination fee
- Loan interest (prorated from the closing date for the following month)
- Prepaid interest
- Application fee
- Assumption fee
- Discount points
- Title search fee
- Mortgage insurance application fee (for down payments less than 20%)
- Upfront mortgage insurance (which can be rolled into monthly payments)
- FHA, VA, and USDA fees
- Lender and owner title insurance
The Closing Costs for Buyers and for Sellers
Typically, the buyer pays the majority of the closing costs. How large a portion the buyer pays depends on sale negotiations – that is, whether the seller has agreed to pay some (or most) of the closing costs in order to sweeten the deal and get a better price.
Often, when a buyer asks for concessions, the seller will agree to pay half the closing costs. This scenario usually occurs when the buyer will have trouble affording the closing costs or when the inspection turns up issues the buyer will have to pay to have rectified.
The point here is that many times there are closing costs for both buyers and sellers.
Figuring Out Closing Costs
Typically, closing costs run about 3% to 6% of the purchase price, with the exact amount depending on the size of the loan and the local tax laws. If, for example, a house sells for $300,000, closing costs will be between $9,000 and $18,000. On average nationwide, buyers pay about $3,700 in closing costs.
Closing costs for sellers typically come in the form of the agent’s commission (in addition to any closing cost the seller has agreed to pay as a concession to the buyer). Usually, sellers pay both their own agent’s commission and the buyer’s agent’s commission. The average commission is about 6% of the sale price (although this is sometimes negotiable).
Getting More Value for Your Closing Costs
It should be pretty obvious, then, that closing costs for buyers and sellers in San Bernardino, Riverside, and San Diego Counties can add up to a significant amount of money. There is a way, though, for both buyers and sellers to ensure that closing costs are kept as low as possible and that they get the most value for those costs. And that is by using a qualified local real estate agent – an agent who can negotiate the best deal for her client.