Living Green Olympia: Curious About Closing Costs? Here are Some Basics

Curious About Closing Costs? Here are Some Basics

When a real estate transaction closes, both buyers and sellers have some closing costs - and these vary widely in different areas of the country.

In Washington State, the seller pays the larger share of the closing cost total.  Some of the main, typical costs are:

*  Commission - whatever percent is agreed to at the time of the listing, payable to listing office and selling office  and based on the purchase price typically.

*  Excise tax - this is a transfer tax charged to the seller at the time real property sells.  In Thurston County this is currently 1.78% of the sales price.

*  Title insurance - this is the fee paid for the title company to research and then insure clear title for the buyer.

*  Escrow fee - this is the charge from the escrow company for their services in preparing some of the necessary documents, recording things properly, disbursing funds as applicable.  Usually seller pays 50% and buyer 50% - except for a VA buyer, where VA regulations prohibit buyer from paying, so seller pays 100%.

*  Recording fees - the county's charge for recording necessary documents.


The buyer has closing costs, too:

*  Loan fees, including origination fee, appraisal, credit check etc. (These fees will be quoted to you by your lender on their good faith estimate when you make loan application)

*  Title insurance - the buyer also pays for a title insurance policy, this time for the protection of the lender.

*  Escrow fee - buyer's half as mentioned above (except for VA buyers).

*  Homeowner's insurance - first year's policy cost

*  Prepaid interest - the interest amount due on buyer's new loan from date of closing to end of month.

*  Impound account - a starting amount of money for property taxes and insurance so that when they next come due, the lender will have the amount collected to make the payment.


Beyond these basics, the seller often will be asked to do some repairs once the buyers have had a home inspection completed.  It is also not at all unusual for the buyers to ask the seller to help with their closing costs.  Often first time home buyers particularly may lack the funds to pay both their down payment and also closing costs, so this contribution from the seller can enable the sale to work out.

Also, there can be miscellaneous charges to a seller for things like having their septic pumped, having well water tested, or paying a special assessment of some kind if any of these are applicable.

Finally,  the property taxes and any homeowners association dues are typically pro-rated between buyer and seller as of the date the sale will close.

Ask your agent and lender for more details of what charges might be applicable for your particular transaction. And if you don't live in Washington, ignore this whole list as your state may have totally different customary charges or allocations as to who pays what when a house sells!




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Nancy Conner, City Realty Inc,    360-701-1086      

Comment balloon 0 commentsNancy Conner • March 15 2010 07:10PM