Counties in the SF Bay Area With The Most Expensive Closing Costs. Who pays?

Whether you are buying or selling, closing costs are inevitable. These costs vary by state, county, and city due to their taxes and fees associated with transferring title. In this article, we’ll highlight what the closing costs are in the SF Bay Area, who pays for them and which counties and cities have the highest fees in the SF Bay Area.

According to CoreLogic’s ClosingCorp, closing costs in the Golden State typically amount to about 1 percent of a home’s sale price, excluding Realtor’s fees. With the state's median home sale price hovering around a substantial $735,480, median closing costs come in at approximately $7,355. In the San Francisco Bay Area, the median sale price of $1.05 million translates to closing costs of $10,500, while the more affordable Central Valley region, with a median price of $449,000, incurs closing costs of $4,490.

Who Bears the Burden: Buyers vs. Sellers

Closing costs are a shared responsibility between the buyer and seller. Read on to see how that 1% is typically split using a $2M home purchase as an example.

Closing Costs for SF Bay Area Buyers

1. Origination Fee: Charged by lenders for loan establishment. Typically around 0.5-1% of the loan. Can be negotiated depending on the lender.

2. Application Fee: Processing fee for mortgage applications. Typically $200-500 and can be waived.

3. Credit Fee: Covers the cost of credit checks during the application process. Typically $25 and can be waived.

4. Mortgage Points: Optional expense to lower mortgage interest rates. Be mindful of the break-even point and ensure it is not too far out as rates may drop making a refi more enticing.

5. Appraisal Fee: Ensures the home's value aligns with the loan amount. Typically $800-2000 based on demand / timing and size of home.

6. Title Fees: Includes title search and insurance. On a $2M, this will be around $2,000.

7. Property Taxes: Prepayment may be required. Typically 2 months worth of taxes. These vary widely based on county, city, and Melle Roos fees.

8. Home Warranty: Policy that can be purchased as an insurance policy that major components of your home work for the first one year. Typically $700-$1,200.

So for a $2M home, this equates to roughly $12-30K in closing costs, depending largely on the lender fees and points.

Closing Costs for SF Bay Area Sellers

1. Commission Fees: Typically the most significant expense, ranging from 5% to 6%.

2. Transfer Tax: Covers property ownership transfer, about 0.11% of the sale price.

3. Title Insurance: Protects against title-related issues, costing from a few hundred to $1,000.

4. Property Taxes: Varies based on location and timing.

5. Homeowners Association Fees: Applicable for homes within an HOA, typically 3 months worth.

6. Wire Transfer Fees: Incurred for mortgage balance payments. Typically can be waived for your own bank.

7. Recording Fees: Charged by the city or county for transaction recording.

8. Notary fees: Typically nominal fee of $15 but if you select a mobile notary it will typically cost $100-150.

9. City Transfer Tax: Levied by cities on property sales, varying by location.

10. Concessions: Covers insurance costs in disaster-prone areas.

11. Attorney Fees: Required for complex sales or title issues.

12. Natural Hazard Disclosures: Sellers in California are required to provide a Natural Hazard Disclosure (NHD) report, which costs around $50 to $150.

13. Home Inspection Fee: Because we live in the highly competitive and expensive SF Bay Area, seller’s pay this in order to get contingencies minimized. Essential for uncovering potential property issues. Typically $1200-$2400, depending on if you order roof, foundation, or pest inspections as well.

So for a $2M home, this equates to roughly $2-4K in closing costs, depending largely on the lender fees and points. [This does not include the seller's realtor fees or the buyer's realtor fees.]

How does this break down across all of the SF Bay Area? Here’s a snapshot of the entire California from First American Title.

For a more specific estimate of your buying or selling closing costs on a specific property or price range, feel free to reach out to me directly.

The Most Expensive Closing Costs by County

As you can see in the above two tables, many counties split the buyer and seller fees when it comes to escrow charges and title fees.

The most expensive counties for buyers, where they are responsible for both escrow charges and title fees:

• Alameda - Oakland (especially over $5M), Berkeley, Emeryville

• Contra Costa

• Lake

• Marin

• Mendocino

• Napa

• San Francisco

• San Mateo

• Solano

• Sonoma

The most expensive counties for sellers, where they are responsible for both escrow charges and title fees:

• Sacramento

• San Benito

• Santa Clara

Closing the Chapter

The cost of selling or buying a house in California can be a bit of a shock to anyone who hasn’t gone through the process before. But knowing what to expect and how to calculate your bottom line at the very end can help eliminate some of the stress and help you budget appropriately for the downpayment size.

This will be especially useful for buyers who are competing for limited inventory in a low interest rate environment. Buyers will need to ensure they have enough liquid reserves in case their appraisal comes in too low. In that case, banks will ask for a larger downpayment in order for them to approve the loan.

If a buyer only has 20% in liquid reserves and the appraisal comes in low, they could lose the deal altogether. That's why collaborating with a seasoned real estate agent, negotiating intelligently, and staying informed about available concessions can significantly impact your bottom line.

Whether you find yourself in the bustling markets of San Francisco or the vibrant neighborhoods of Silicon Valley, a comprehensive understanding of these costs ensures a smoother and more informed transaction. Trust the process, explore your options, and remember, in the complex dance of real estate, knowledge is your most powerful ally.