Perhaps the most confusing part of a real estate transaction for most buyers and sellers is who pays for what. In general, many of the closing costs will be on the buyer’s side, although buyers often ask the sellers to cover the costs in full or at least in part. Keep in mind which party pays for most of the costs is negotiable in the purchase agreement, and it is not mandatory to be paid by either the seller or buyer.
Following is what you can expect to pay as the seller.
Seller Fees in the Bay Area
- Broker’s commission
- State and local transfer taxes
- Documentary stamps on the deed
- Title insurance (Owner’s Policy)
- Seller’s share of the escrow fee
- City and county inspections, including the water conservation certificate (where applicable)
- Homeowners association transfer fee and fee to provide documents
- Prorated HOA fees
- Pest control inspection
- Prorated property taxes
- Home warranty plan
- Fees noted in the purchase agreement
- Miscellaneous fees such as messenger fees and notary fees
The sales price is not the only thing buyers and sellers may negotiate. If the buyer lacks the money for the closing costs and the down payment, the buyer may offer to pay a certain amount for the home in exchange for the seller paying some or all of the closing costs allowed.
Prorating Closing Costs
Certain costs are prorated at closing between the buyer and seller, particularly property taxes. This is because of the due date for the taxes. The seller pays for the portion they owe on the home in the Bay Area while they owned the property, while the seller is responsible for the taxes starting on the day they buy the home. The escrow holder often uses the most recent property tax bill and prorates the amount due before escrow closes.