Thursday, February 9, 2017

What are Seller's Closing Cost and who pays?




Whether you are a seller or a buyer in the sale/purchase of a home, there are three types of cost categories you need to be aware of that is associated with closing escrow.



1. Transactional Costs – Those costs to the seller and buyer typically pays that is associated with transferring title from one party to another.

2. Prorated Variable Re-Occurring Costs – These are cost that the home owner pays; mortgage, Interest, HOA dues, insurance, taxes, etc. These costs may fluctuate depending on what day of the month escrow closes.

3. Non-Refundable Costs – Costs associated with obtaining various inspections and reports; termite/pest, home inspection, etc. 

Typical Seller Transactional Costs:

1. Broker/Agent Fees – These are negotiable fees typically paid by the seller to the seller’s agent and buyer/selling agent

Cost Estimate – Negotiated with the listing agent before the home is put on the market for sale. Fee typically run between 5% - 7% of the final sale price.

2.Owners Title (Insurance) - Title insurance protects the buyer from any legal challenges that could arise from a third party challenging the ownership status or title of home if something didn't show up during the title search. Prior to closing escrow, if there is anything wrong with the title (known as a cloud or defect), the seller will need to fix it so the sale can proceed.

Cost Estimate – This is a static cost in CA. Depending on home selling price the owner cost will range from $2.00 - $3.00 per $1000 for a home selling between $500k - $1.5M. Example $750,000 home = $1,944 or $2.59 per $1000.

3. County Transfer Tax – This is the tax associated with the transfer of the title from one owner to another.

Cost Estimate – This is a static cost in California. $1.10 per $1000 for the home selling price. Static cost in CA. Example $750,000 home = $825

4. Escrow Charges - Fees associated by a neutral third party hired to manage the funds and carry out the provisions per the instructions or contract. In Orange County fees are split 50/50 with buyer. Below are the estimated sellers portion. 

Cost Estimate - Estimate $2.00 per $1000 Plus $250 to seller. Example $750,000 home = $1,750.

5. Miscellaneous Fees – Typically associated with the administrative aspect of the transaction; Courier, notary, wire and recording fees.

Cost Estimate - $250, but can fluctuate depending on complexity of the transaction.

Typical Prorated Re-Occurring Seller Costs

1. Monthly loan/mortgage payment, paid interest, home owner insurance, property tax, special assessments/mello roos (if applicable), HOA - home owner association fees & special assessment (if applicable) and property mortgage insurance (if applicable).

Cost Estimate - Varies depending costs of services provided and date of closing based on a 30-day month.

Typical Non-Refundable Seller Costs 

1.Home Warranty Insurance - Home Warranty is paid for by the seller to cover household items for the next year after escrow closes. Cost of service calls to repaired covered items after escrow closes in at new home buyers expense.

Cost Estimate - Varies depending on service provider and coverages. $500 - $600 estimate and added to closing statement.

2.Natural Hazard Disclosure - In California an Natural Hazard Disclosure (NSD) is required by law. This report through Disclosure Save includes the NSD report, tax information and environmental report. Gives the owner and the buyer the confidence that all the information has been gathered and reviewed to minimize issues later.

Cost Estimate - $150 estimate. Cost added to closing statement.

3.Termite & Pest Inspection - Termite inspection is conducted by the buyer to ensure the property is free of termites and pests.

Cost Estimate - $125 estimate for report and added to closing statement. Section 1 items to be corrected are typically at the seller’s expense.

4.Homeowner Association Transfer Fees – If applicable, these are the transfer Fees and preparing the HOA documents.

Cost Estimate - $400 - $600 estimate

5.Smoke Detector, Carbon Monoxide and Water Heater - Carbon monoxide detectors must be present, installed correctly and in good working order. Water heater must be braced correctly.

Cost Estimate - Any costs to bring carbon monoxide detectors and water heater bracing to compliant level typically is at the seller expense

* All information presented in this document are guidelines and should not be relied upon in anyway as every situation is unique. Please consult with your providers to get accurate costs relating to your specific situation.


Variable Re-Occurring Costs – These are cost that the home owner pays; mortgage, Interest, HOA dues, insurance, taxes, etc. These costs may fluctuate depending on what day of the month escrow closes.

3. Prorated Non-Refundable Costs – Costs associated with obtaining various inspections and reports; termite/pest, home inspection, etc. 

Typical Seller Transactional Costs



1. Broker/Agent Fees – These are negotiable fees typically paid by the seller to the seller’s agent and buyer/selling agent

Cost Estimate – Negotiated with the listing agent before the home is put on the market for sale. Fee typically run between 5% - 7% of the final sale price.

2. Owners Title (Insurance) - Title insurance protects the buyer from any legal challenges that could arise from a third party challenging the ownership status or title of home if something didn't show up during the title search. Prior to closing escrow, if there is anything wrong with the title (known as a cloud or defect), the seller will need to fix it so the sale can proceed.

Cost Estimate – This is a static cost in CA. Depending on home selling price the owner cost will range from $2.00 - $3.00 per $1000 for a home selling between $500k - $1.5M. Example $750,000 home = $1,944 or $2.59 per $1000.

3. County Transfer Tax – This is the tax associated with the transfer of the title from one owner to another.

Cost Estimate – This is a static cost in California. $1.10 per $1000 for the home selling price. Static cost in CA. Example $750,000 home = $825

4. Escrow Charges - Fees associated by a neutral third party hired to manage the funds and carry out the provisions per the instructions or contract. In Orange County fees are split 50/50 with buyer. Below are the estimated sellers portion. 

Cost Estimate - Estimate $2.00 per $1000 Plus $250 to seller. Example $750,000 home = $1,750.

5. Miscellanious Fees – Typically associated with the administrative aspect of the transaction; Courier, notary, wire and recording fees.

Cost Estimate - $250, but can fluctuate depending on complexity of the transaction.

Typical Prorated Re-Occurring Seller Costs

1. Monthly loan/mortgage payment, paid interest, home owner insurance, property tax, special assessments/mello roos (if applicable), HOA - home owner association fees & special assessment (if applicable) and property mortgage insurance (if applicable).

Cost Estimate - Varies depending costs of services provided and date of closing based on a 30-day month.

Typical Non-Refundable Seller Costs 

1. Home Warranty Insurance - Home Warranty is paid for by the seller to cover household items for the next year after escrow closes. Cost of service calls to repaired covered items after escrow closes in at new home buyers expense.

Cost Estimate - Varies depending on service provider and coverages. $500 - $600 estimate and added to closing statement.

2. Natural Hazard Disclosure - In California an Natural Hazard Disclosure (NSD) is required by law. This report through Disclosure Save includes the NSD report, tax information and environmental report. Gives the owner and the buyer the confidence that all the information has been gathered and reviewed to minimize issues later.

Cost Estimate - $150 estimate. Cost added to closing statement.

3. Termite & Pest Inspection - Termite inspection is conducted by the buyer to ensure the property is free of termites and pests.

Cost Estimate - $125 estimate for report and added to closing statement. Section 1 items to be corrected are typically at the seller’s expense.

4. Homeowner Association Transfer Fees – If applicable, these are the transfer Fees and preparing the HOA documents.

Cost Estimate - $400 - $600 estimate

5. Smoke Detector, Carbon Monoxide and Water Heater - Carbon monoxide detectors must be present, installed correctly and in good working order. Water heater must be braced correctly.

Cost Estimate - Any costs to bring carbon monoxide detectors and water heater bracing to compliant level typically is at the seller expense


It is very important that both your lender and Realtor work together to review this process, so you the home seller have a complete understanding.   Please do not hesitate to contact us at Chuck Harper Homes to review.


* All information presented in this document are guidelines and should not be relied upon in anyway as every situation is unique. Please consult with your providers to get accurate costs relating to your specific situation.




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