Real Estate Closing Costs

Mike Capelle, Broker/OwnerMike Capelle, Broker/Owner

The charges to purchase real estate involve more than just loan costs.

Closing is the final step in executing a real estate purchase. In a closing, all costs associated with the purchase are settled. Closing costs usually total about 3 percent of a property’s sale price. Following are some typical closing costs that may–or may not–be related to your particular purchase. In most cases, the buyer pays the bulk of the costs, with the seller paying for 50% of the title insurance and escrow fee, for the transfer taxes, and for the natural hazard report. Buyers should be aware of the closing costs they are expected to pay, because these fees can add significantly to the amount of money they need to complete a purchase.

  • Credit Report – Cost to obtain a credit report for financing
  • Loan Origination – Charge to process a loan application
  • Appraisal Fee – Charge for the appraisal of the property for financing
  • Loans – Seller loan(s) to pay off, and/or new buyer loan(s)
  • Prorated Interest – Loan interest prorated to the date of closing
  • Prorated County Tax – Property taxes prorated to the date of closing
  • Transfer Tax – City or county tax on the property transfer
  • Recording – Fees to record the transaction in the county’s records
  • Escrow Deposits – Funds paid by buyer or seller towards the purchase
  • Commissions – Listing and selling agents’ commissions
  • Title Insurance – Cost of a title insurance policy to protect against defects in the property title
  • Escrow Fee – Charge for escrow services
  • NHD – Cost of a Natural Hazard Zone Disclosure report
  • Survey – Charge to determine property boundaries if desired
  • Pest Inspection – Cost of inspection and report for wood destroying pests and organisms
  • Septic Inspection – Cost of a septic system inspection
  • Well Inspection – Cost of to test a water well for potability and productivity
  • Home Inspection – Cost of a professional home inspection if desired
  • Homeowner’s Insurance – Cost of buyer’s hazard insurance
  • Home Warranty – Cost of a home warranty plan to cover the unexpected repair or replacement of appliances, major systems, and other components of a home.

The complexities of closing costs are one more reason that you should engage the services of a real estate broker early in your pursuit of property. A real estate professional can help you understand what costs are involved in the purchase of various types of property, and estimate the costs associated with a particular property you are interested in.

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