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Home Owner, Home Owner in San Jose, CA

Is it normal for sellers NOT to pay the closing costs? And how much do the closing costs actually cost? And if the seller doesn't pay, would

Asked by Home Owner, San Jose, CA Fri Sep 16, 2011

it... ...would it be my own, out of pocket, cash expense?

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Hi Home88 and thanks for your post.

Erica is bang on with her answer--Santa Clara County is different from almost every other county in the state in that the seller is required to pay most of the closing costs associated with the sale of the home. The buyer pays for closing costs associated with the loan, and with title insurance for the lender. In other counties, the situation is different, and the seller pays no closing costs, while the buyer pays for ALL of the closing costs. Yes, it's certainly negotiable, but in areas where home sales are brisk, the seller is unlikely to negotiate and agree to take on more costs than would be ordinarily expected of him/her.

The only caveat to the closing cost issue is the amount that is allowed in both REO or post foreclosure homes and in short sales. In fact, banks who must approve short sales are starting to place "caps" on the amount allowed for escrow charges, which, almost effectively makes much of the closing cost the responsibility of the home buyer even in a county where the seller traditionally pays. So, to be on the safe side, always work with your Realtor and mortgage broker to determine exactly what costs you'll pay and what costs you might have to pay for the short sale or REO property.

Good luck!!

Sincerely,
Grace Morioka, SRES
Area Pro Realty-People's Choice
0 votes Thank Flag Link Fri Sep 16, 2011
In Santa Clara County the standard is for seller to pay, but with some foreclosures, the banks won't pay for seller closing costs. In those situations, it is relatively common for the buyer's agent to ask for fees to cover some of those costs.

I typically see seller fees in the 7% range and buyer fees in the 1% range in Santa Clara County. Closing costs include many different things.

Having said this, any transaction can be unique. If you want a home, you like the price, and the only "place" you don't agree with seller is on closing costs you can negotiate. Offer 6% less than market and pay closing costs. The nice thing then is that you get to pay taxes on a lower number, because taxes are calculated based on purchase price.

Good luck!

Erica
0 votes Thank Flag Link Fri Sep 16, 2011
Your question depends on where you’re buying and the deal. Each deal is different. It’s preferred for each party to pay their own cost, however, the buyer can ask the seller to pay their closing costs. It’s also possible for lenders to credit buyer’s part of the lending fees the buyer may owe.

As far as what’s typical for costs; it depends on if you have a FHA or conventional loan. The costs for FHA are higher because there is a mandatory mortgage insurance premium you pay. Generally you're looking at 1.5% on average.

I’d be happy to connect you with a lender and sit with you to help you understand what you may be looking at. The most important thing is what you’re doing now, asking questions and planning.

David Sciplin, Real Estate Counselor
Better Homes and Gardens, Mason-McDuffie
1213 Lincoln Avenue, Suite 108
San Jose, CA 95125
Direct: 408-647-6326
DRE#: 01477066
0 votes Thank Flag Link Fri Sep 16, 2011
Hi Home88,
I like all the comments made by other agents. Everything is negotiable in home buying and of course the seller does not have to agree with you. This is why you need to work with agents who have negotiation skills so they can help you save money.
Good luck,

Kevin Vo
408-228-2161
kevinvohomes@yahoo.com
0 votes Thank Flag Link Fri Sep 16, 2011
Home,

Either Carol has a typo in her answer or Manteca has some crazy fees, but unless you have some huge rate buydown cost fees usually run about 1% of the purchase price.
0 votes Thank Flag Link Fri Sep 16, 2011
All closing costs are 100% negotiable! Typically in Santa Clara County the seller pays for the Title insurance, escrow fee, county transfer tax, and in San Jose 1/2 of the city transfer tax
paying for the buyers closing costs is part of the buyers offer, if they want...it is not an absolute clear cut requirement that the seller pay for any buyer's closing cost....it's all negotiable!!!
0 votes Thank Flag Link Fri Sep 16, 2011
Hi Home88,

In today's market, a lot of sellers do not want to agree to pay buyer closing costs (especially if the property is a short sale or an REO/bank owned property). However, if you really 'need' them, add them to your purchase price - this may help the seller look more favorably upon them. Keep in mind though if you do this, the property should appraise for your 'total' offer price (including the closing costs you ask for) and this may not happen.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Fri Sep 16, 2011
Dear Home88,

Closing costs are different in each county by custom so it would be helpful in answering your question if you could tell us the city or county where you are planning on buying your home. Also the usual and customary division of closing costs in each county can be altered by what a willing buyer and seller agree to in the contract. It is not uncommon for the closing costs division to be different than the custom for that county. I hope this helps you.

If you have an agent they should be able to answer your questions regarding closing costs.

Regards,

Jim Guido
0 votes Thank Flag Link Fri Sep 16, 2011
Hello,

Typically buyers’ closing costs are 3% of the sale price. Buyers closing costs are fees that are charged for the buyer’s loan and closing costs. There are times buyers’ closings costs can be negotiated to be paid by the seller at closing. Negotiating with the seller to pay buyer’s closings needs to be in writing and is usually included in the purchase contract. When there are multiple offers, often the buyer will have to raise the purchase price to help cover the closing costs to complete with the other offers that are not asking for closing costs.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
DRE 985176
0 votes Thank Flag Link Fri Sep 16, 2011
As a follow up, you can ask for a credit for non-recurring closing costs or a price reduction when negotiating, but a price reduction will only slightly lower your monthly payment whereas a credit will be directly applied to out of pocket costs...
0 votes Thank Flag Link Fri Sep 16, 2011
This can depend on so many factors, your area/price range/etc. I have found very few buyers asking for closing costs these days, but again, looking at just MY buyers is a very small pool.

If the seller doesn't agree to closing cost assistance, then yes, it is the buyers responsibility.

As a seller, an offer with closing cost assistance can raise some red flags regarding the buyer's ability to purchase, cash available, etc. Also, they have to keep in mind that the home has to appraise for the amount of the offer (including the closing costs) so this can be a concern.
0 votes Thank Flag Link Fri Sep 16, 2011
When buying in San Jose, the customary closing costs include:

Title Fees: Seller Pay

Escrow Fees: Seller Pay

Documentary Transfer Tax:
($0.55 per $500.00) Seller Pay

City Transfer Tax:
($1.65 per $500.00) 50/50 Buyer/Seller

Buyers will also have to pay closing costs related to their loan (lender costs, etc.).

However, like anything, closing costs are negotiable. You can ask the seller to pay your closing costs when you write up the contract but they don't have to agree to it.

Trang Beuschlein
San Jose CA Real Estate
CA DRE License #01453711
0 votes Thank Flag Link Fri Sep 16, 2011
Home,

Who pays what closing costs are usually done on what's customary practice. For example, in San Francisco the seller pays the transfer tax and the buyer pays all other closing costs. And yes, any closing costs will be an out of pocket expense. Your realtor can tell you what's customary or you can call a local title company.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Fri Sep 16, 2011
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