I am often asked by both sellers and potential buyers in Pacific Palisades and/or in Santa Monica what the various expenses are in the process of their sale or purchase of a home.
Here is a summary of the traditional distribution of expenses associated with residential real estate transactions. It should be noted that many of these items can be negotiated by both parties as part of the Residential Purchase Agreement, excluding some expenses that may be required by the City or the buyer's lender to be paid specifically by the seller.
Sellers can generally be expected to pay for :
Please note: All of the sellers and buyers closing costs listed below, real estate commission are negotiable and are defined by the contract between the two parties.
- Owner's Title insurance Policy premium
- Escrow fees (typically 50/50)
- City transferor conveyance tax (defined by contract)
- County transfer tax ((defined by contract)
- Documentary Transfer Tax (see ULA laws)
- Property taxes proration (to the date of sale)
- Public reports - myNHD - approximately $95
- Retrofitting (such as smoke and carbon monoxide detectors, hot water heater strapping, low flow toilets, etc.) - approximately $125
- Misc. escrow, title and recording fees
- Homeowners transfer fees and document preparation fees (if applicable)
- HOA documents if it's a condo (approximately $400-$500)
- Any unpaid homeowner's dues
- Commissions to Buyer/Seller agents (negotiated by Seller)
- Home Warranty (defined by contract)
- Termite Work (negotiable)
Buyers can generally be expected to pay for :
Please note: All of the sellers and buyers closing costs listed below, real estate commission are negotiable and are defined by the contract between the two parties.
- Escrow fee (typically 50/50, each pays their own fee)
- All new loan charges (except if any are required by lender for seller to pay)
- Notary fees (around $100-$200)
- Recording charges for all documents in buyer's name
- Tax proration (from date of acquisition)
- Interest on new loan from date of funding to 30 days prior to first payment date
- Lender's title insurance policy premium
- Fire insurance premium for first year
- Some homeowner's transfer fees (and possible move-in fees, if applicable)
- Financing document preparation and messenger fees (if applicable)
- Inspection fees (such as home inspection - approximately $300-$500, sewer and chimney scoping $250-$400, environmental testing such as mold inspection $250, geological inspection, etc.)
- Termite Inspection (defined by contract)
The following are a few items that are occasionally negotiated in the purchase process, with either seller or buyer agreeing to pay for them:
- Recommended pest control work (termite removal, repair of dry-rot-damaged wood, etc.)
- Home warranty protection plans
KEY TAKEAWAYS
- Closing costs are a set of final expenses paid for completing a real estate transaction.
- The seller and the buyer both pay closing costs in California.
- The 3 major Seller Closing Costs in California are:
- 1. REALTOR Fee
- 2. Recording Fee
- 3. Escrow and Title Fees
- The 3 major Buyer Closing Costs in California are:
- 1. Loan Origination Fee
- 2. Appraisal
- 3. Escrow Fee
- In California, real estate transactions are usually closed by escrow agents and title companies.
While the above are the customary distribution expenses associated with residential real estate transactions in Santa Monica or Pacific Palisades, many of these could be covered by the other party. For example, a buyer wishing to make their offer stand out over others in Seller Multiple Counter Offers, might propose paying for the seller's portion of escrow and/or other traditional seller expenses.
Alternatively, a buyer wishing to conserve cash may request that the seller cover some of what traditionally paid by the seller expenses. If you'd like to learn more, please do not hesitate to contact Alena Lehrer, Luxury Real Estate Specialist with Coldwell Banker Realty, Beverly Hills. e-mail: [email protected]
Alena Lehrer
