Closing Escrows - Closing Costs

This list will give you an idea of what items are typically included in closing costs (not the specific amounts, as fees can vary). The buyer and seller may negotiate "who pays what", but once the contract is signed, instructions cannot be changed unless mutually agreed upon by all parties in writing.

Real Estate Commission

If the property is listed or sold by an agent, there will be commission(s) to calculate. Commissions are usually paid by the seller.

Taxes

The seller is required to pay the property taxes through the last day of ownership.

Homeowner's Insurance

The buyer will purchase a fire and hazard insurance policy. Frequently the lender requires the first year's insurance premium to be paid at close of escrow.

Assessments and Liens

Assessments or liens against individuals and/or the property must be paid off before the close of escrow. The title company will normally show much of this information in the Preliminary Report and the escrow officer will work with the appropriate parties to clear up any problems so that the escrow may close.

Escrow Fees and Title Insurance

Depending upon the customs of the area, the seller or buyer can pay the title insurance fee that is referred to as the owner's (or homeowner's) policy. The owner's policy covers the new owner's interest and "title" to the new property. The buyer typically pays for the "lender policy" that will cover the new lender's interest in the "title" to the property. Who pays the escrow fee is frequently dictated by county or regional custom, but is generally split between the buyer and the seller except on certain types of government loans.

Inspections and Other Fees

Attorney's fees
Document preparation fees
Loan fees
Notary fees
Pest inspection
Tax service fees
Deed recording charges
Home warranty
Natural hazard disclosure report
Pest correction costs
Special courier or delivery fees

Who Pays What?

There are a variety of services required to close a real estate transaction and some fees that may apply. "Who pays what" is dictated by the traditions and practices in each area, and varies from state to state (and even county to county). FHA and VA loans may also have some differing rules and procedures. Here is a general guide to fees and services that may be required. Remember, many items in the real estate contract are negotiable.

Seller

Real estate commission as specified in listing agreement or sales contract
Any applicable city, county or real property transfer taxes
Payoff of all loans in seller's name including:
- Principal balance plus interest
- Any demand, re-conveyance or other fees
- Any prepayment penalties
- Preparation of documents
Any judgments, tax liens, etc. against the seller
Any unpaid property tax amount at time of transfer
Any unpaid homeowner association dues
Any bonds or assessments (if specified in contract)
Any delinquent taxes
Termite inspection and/or work (if specified in contract)
Home warranty (if specified in contract)
Notary fees, if applicable
One-half of the escrow or sub-escrow fees (if customary in your area)
Title insurance premium (if customary in your area)
Recording charges to clear all documents of record against seller

Buyer

Real estate commission as specified in listing agreement or purchase contract
Loan charges as required by lender, including
- Any loan origination fees or funding fees
- Credit report
- Preparation of documents
- Pre-paid interest
- Appraisal fee
Impounds for taxes and fire insurance (as required by lender)
Termite Inspection and/or work (if specified in contract)
Other inspection fees (if specified in contract or required by lender)
Home warranty (if specified in contract)
Any applicable city, county or real estate property transfer taxes (as specified in contract)
Title insurance premium (is customary in your area)
Lender's title insurance premium and endorsement fees as required by lender
One-half of escrow or sub-escrow fees (if customary in your area)
Recording charges for all documents in buyer's name