Closing Costs

CATALINA REALTORS

BUYER AND SELLER COSTS IN REAL ESTATE TRANSACTIONS

There are many fees and taxes associated with the sale of property.  This list reflects customary negotiable buyer and seller costs in Avalon and the County of Los Angeles. 

Actual costs vary by several factors such as the purchase price, loan amount, inspections, termite or repair work, loan pay off etc.

Please call us if you have questions. We can arrange for the Escrow Company to provide an  “Estimate of Buyer Costs” or “Estimated Seller Proceeds” so you will have a better understanding of fees. It is nice to know about fees before entering into any contract or transaction. Please ask questions with the understanding that it is out of our scope as real estate brokers and agents to give advice or attempt to answer any legal or tax questions. Tax and/or Legal questions should be answered by licensed professionals working in those fields.   

~Your biggest hurdle may be your down payment when purchasing a home, but it's important to remember the closing costs. Closing costs are the miscellaneous fees associated with any property sale or refinance. You can expect to pay anywhere from 2 to 4 percent of the total sale price in closing costs,.

Fees Typically Paid by Either Buyer of Seller:

Home Warranty, paid by either the buyer or the seller. Warranties are available on resale homes insuring major household systems against repair or replacement for the buyer's initial year of ownership. Sellers will sometimes offer these warranties as a marketing strategy, or buyers can elect to purchase them at closing.

Survey~ although this is not too typical in Avalon we have had instances where a survey was necessary. This fee is for a survey of the lot or land and all structures on it, paid by either party, to confirm lot size and dimensions and check for lot line encroachments or easements. 

Typical Seller Costs:

The Seller generally pays for:

Payoff all loans in seller's name plus prepayment penalties Interest accrued to lender being paid off, statement fees, reconveyance fees and prepayment penalties Termite inspection (according to contract) Termite work (according to contract) Home warranty

Escrow fee charged by the escrow company for their services, customarily ½ the total escrow fee.

Owners' Title Report.  This insures that the seller has clear title to the property and that there are no problems or liens or other clouds on the title.

Property Hazard Report required by the state of California.  This document, prepared by companies who specialize in it, itemizes dozens of potential hazards, from earthquake faults to nearby airports and how they might affect the property.

Termite Inspection and Section 1 repairs.  The termite report has 2 sections: Section 1 lists  absolutely necessary repairs.  Section 2 items are recommended repairs.

Hot Water Heater Strapping

Smoke Detector Installation, if neither of these has been done.  

Carbon Monoxide Detector Installation

Retrofit Requirements by local and/or county governments.  

Document Transfer Tax, charged by the County of Los Angeles at the rate of approximately $1.10 per $1,000 of the sales price

Property taxes and any bond or assessment fees to the date the sale closes. Tax proration (for any taxes unpaid at time of sale) plus any and all delinquent taxes.

Home Owners Association dues on condominiums if unpaid. 

Home Owners Association transfer fees on condominiums

Payoff fees for the sellers' loan.  (This is above the amount still owed on the seller's home loan.)

Notary Fees

Express Delivery and/or Courier fees, if necessary.

Recording fees charged by the County Recorder.

Title Service, This fee can be paid by either party according to the contract but it is customary in Southern California for seller’s to pay for a title search and title insurance.

Termite Inspection and Section 1 Termite Eradication and Repair,

Recording Fees, paid by either party, charged by a governmental entity for entering an official record of the change of ownership of the property and recording the deed.

Court Judgments, Tax Liens,  if applicable. 

California State Taxes, If you sell real property, other than your primary residence, you may owe California withholding tax of 3 1/3 % of the sale.  Please discus this with your tax person.

Brokerage Commission, paid by the seller to the Real Estate Broker.

Typical Buyer Costs

The Buyer generally pays for:      

Escrow fee charged by the escrow company for their services -- 50%.

Lender's Title Policy.  This insures the lender that the title to the property is clear and free of liens or other problems.

Document preparation fee which may be required by the lender.

Inspection costs

Termite repairs - Section 2.  (Future Infestation problems)

Notary fees and express delivery fees, if necessary.

Mortgage: Buyer Credit Check, Application Fees, paid by the buyer to the lender, to cover the costs of processing their loan application. In some cases, the buyer would pay the lender the application directly and prior to closing, while in other cases the fee is part of the buyer's closing costs payable at closing.

Points paid by the buyer to the lender. Points are a form of pre-paid interest, charged by the lender as an alternative to charging a higher rate of interest on the mortgage loan. One point equals one percent of the loan principal.

Appraisal Fees, usually paid by the buyer. The bank typically charges this fee to pay for an appraisal by a licensed professional appraiser. The purpose of this appraisal is to ensure that the sale price of the property upon which the underwriting of the loan is based) is equal to or greater than the fair market value of the property.

Home Inspection Fees, usually paid by the buyer (although occasionally by the seller), charged by licensed contractor or home inspector. Some lenders require inspections to verify that the property is in good condition.

Pre-paid Property Insurance, Lenders will typically require that a mortgaged property be insured at all times throughout the life of the mortgage, and will usually require that the first full year's property insurance premium be paid in advance by the buyer. If the buyer has not already paid the insurance company directly, this would become another closing cost payable at closing.

Pro-rated property taxes, paid by the seller, the buyer, or both. Most (but not all) jurisdictions assess taxes on real property, which are usually payable at a specified date annually. Since all but a tiny fraction of real estate transactions close on a date other than this one specified annual date, most transactions must include an adjustment to assure that both the seller and the buyer end up paying their share of the annual property tax, proportionate to the percentage of the year that each has ownership of the property. Usually required by institutional/commercial lenders and by the real estate contract.

Condominium Homeowner Association Dues, If the HOA dues are not paid current, the sellers will usually pay any past amount owed. HOA Dues are prorated on the date escrow closes.   

Pro-rated Interest, paid by the buyer but may be reimbursed by the seller. The monthly mortgage payment is calculated and payable on a specified day each month. If the closing does not actually fall on that specified date (which is usually the case), then an adjustment must be made to calculate the interest on the loan for the number of extra days until the first payment is due.

Federal law requires that all residential transactions financed by a mortgage have all closing costs documented in detail upon the standard HUD-1 Form. This information must be provided to the principals but does not have to be sent to the government. Instead a Declaration or Statement by Buyer and/or Seller is often required to be provided to the government office recording the deed. Form 1099-S may be required to be sent to the United State Internal Revenue Service.

Recurring Buyer Costs

Property Tax, Los Angeles County Tax Assessor’s Office, http://ttc.lacounty.gov/

Private Mortgage Insurance~your circumstances may not warrant privatemortgage insurance.

Flood Insurance~ You may live in an area where flood insurance is not required. In Avalon most of the “flats” (Sumner, Beacon, Clarissa, Descanso, Catalina, Clemente, 3rd Street, Eucalyptus, Tremont Street etc.) are in a FEMA Flood Zone. 

Fire Insurance~ For the most part, Avalon is considered to be a “High Fire Severity Zone”

Bank Owned REO Per Diem Charges~ Recently on some of the bank-owned property we have been selling, banks will ask for a per diem amount for every additional day after the specified date of closing it takes the buyer to close.  The bank does not collect this fee if a delay in closing is caused by them. We will generally ask the bank/seller to remove this clause from contracts.