Buying and selling property in Sacramento is not just about negotiating the price. One of the first factors to consider when purchasing or selling real estate is the cost involved in closing the deal. Closing costs can add thousands of dollars to the total expense of the purchase.
When you have an understanding of what the typical cost of closing real estate deals in Sacramento is, you are better equipped to know what to expect during such transactions. Regardless of whether you are buying or selling the properties, you must know all about the cost of closing in Sacramento.
What Are Home Closing Costs?
Closing costs refer to the expenses associated with purchasing a home. These costs are paid during the closing process, when ownership of the property is transferred from the seller to the buyer.
Unlike the down payment, which is paid solely by the buyer, closing costs include several items such as lender fees, title fees, and taxes, among others. In Sacramento, some closing costs may be split between both parties.
A list of the typical fees incurred during the closing of homes includes:
- Loan Origination Fees
- Appraisal Fees
- Escrow Fees
- Title Fees
- Recording Fees
- Property Taxes
- Inspection Fees
- Transfer of HOA Fees
Several factors determine the amount of closing costs, such as the cost of the home and the mortgage being used.
Average Closing Cost for Sacramento Home Buyers
Closing costs for a buyer in Sacramento typically range from 2% to 5% of the purchase price. For example, if you purchase a home worth $600,000, your closing costs could range from $12,000 to $30,000.
Several factors can influence the final amount you pay, including the lender, the type of loan, and any prepaid expenses, among others.
Typical Closing Costs for the Buyer
| Type of Expense | Cost Estimate |
| Loan Origination Fee | $1,000-$3,000 |
| Home Appraisal Fee | $400-$700 |
| Home Inspection Fee | $300-$600 |
| Escrow Fee | $1,000–$2,000 |
| Title Insurance | $800–$2,000 |
| Recording Fees | $100–$300 |
| Prepaid Taxes & Insurance | Varies |
Loan Origination and Lender Fees
Origination and lender fees are charged by lenders to cover the cost of processing, underwriting, and issuing the loan. Buyers can potentially save money on these fees by shopping around, as they can vary significantly between lenders.
Appraisal and inspection costs
An appraisal confirms that the home’s value supports the mortgage amount. The buyer typically pays for the appraisal and, in most cases, also pays for a home inspection conducted by a qualified professional to identify any defects before closing.
Escrow and title fees
Escrow services ensure the secure exchange of funds and documents during the real estate transaction. Lenders also require title insurance fees. Title insurance protects both the buyer and lender against undisclosed issues or defects in the property’s ownership history.
Prepaid costs
Prepaid costs include property taxes, homeown3er’s insurance, and mortgage interest. Buyers are required to prepay certain expenses, such as property taxes, insurance, and interest charges, at closing. These funds are typically held in escrow until they are due.
Average seller closing costs in Sacramento
Seller closing costs in Sacramento are generally higher than buyer closing costs. For most sellers, total costs, including real estate commissions and closing expenses, typically range from 6% to 10% of the home’s sale price. For example, a $600,000 home sale may involve more than $35,000 in seller closing costs.
Real estate agent commissions
Real estate commissions are usually the largest expense for sellers in a transaction. In many Sacramento deals, sellers may pay both their listing agent’s commission and the buyer’s agent’s commission. Combined commissions typically range from 5% to 6% of the final sale price.
Other sellers lose costs
- Owner’s title insurance
- Escrow fee
- Transfer tax
- Buyer repairs or credits
- HOA transfer fee
- Accrued property taxes
- Mortgage pay-off balance
Repair Costs and Buyer Credits
It’s common after inspections for buyers to request repairs or credits from the sellers. To keep the deal going and avoid delays, sellers will often agree to split the cost of any repairs or give a credit.
Factors that impact closing costs in Sacramento
Closing costs vary, and every transaction is different. Several factors determine how much buyers and sellers will pay in Sacramento:
Home purchase price: Higher-priced homes generally come with higher closing costs, as some fees are calculated as a percentage of the home or loan amount.
Mortgage loan type: Conventional, FHA, VA, and jumbo loans each have different fee structures. Government-backed loans may include additional costs, such as funding fees and mortgage insurance.
Property taxes and insurance: Property taxes paid to Sacramento County and homeowner’s insurance premiums are included in prepaid closing costs. Homes in higher-risk areas of Sacramento may also have higher insurance premiums.
HOA fees: If the property is part of a homeowners association, buyers may be responsible for transfer fees, document fees, and prepaid HOA dues.
Sacramento market conditions: In a competitive seller’s market, buyers may offer to cover additional closing costs to make their offers more attractive. In less competitive market conditions, sellers may be more willing to contribute toward buyer closing costs.
How to Reduce Home Closing Costs?
While they can’t always be avoided, buyers and sellers have a few options to lower their respective closing costs.
Compare loan estimates: Buyers should compare mortgage loan estimates from a few different lenders to find lower fees and lower interest rates.
Ask for seller concessions: Buyers can request that sellers include concessions to pay toward a portion of the buyer’s closing costs. Seller concessions may be possible depending on market conditions.
Boost your credit score: Buyers with higher credit scores are likely to be approved for more favorable loan terms and may qualify for lower lender fees.
Close near the end of the month: Buyers who close near the end of the month may pay less interest on their prepaids, because the buyer will only pay interest for the remainder of that month.
Review documents: Both buyers and sellers should look for duplicate or excessive charges on their final closing disclosure before signing any paperwork.
What To Think About When Buying Sacramento Real Estate?
Although Sacramento provides more affordable options when compared to the Los Angeles and San Francisco areas, the buyer is likely still to face some costs in their closing expenditures.
Buyer costs can add up due to required inspections for an older house, whether it be the roof, plumbing, or termites. Homeowner insurance can be higher in areas neighboring Sacramento, as these locations may be prone to fire.
When buying new construction homes, builder fees for closing will also be added into the closing costs for the buyer; sometimes, the builder may take part in incentives that will add to savings for the buyer.
Conclusion
As we can see, knowing average home closing costs in Sacramento can benefit both parties. These costs can significantly affect the overall expense of a real estate transaction, so careful budgeting is essential.
Buyers in Sacramento can expect to pay between 2% and 5% in closing costs, while sellers typically pay between 6% and 10%, largely due to real estate commission fees and additional expenses.
At Reliance Financial suggest that negotiating rates with lenders, being aware of all fees, and carefully reviewing the settlement statement for errors or unusual charges can help minimize expenses and reduce stress for both buyers and sellers.
FAQs
What are seller closing costs in Sacramento?
Seller closing costs are generally composed of real estate agent commission, escrow charges, title insurance, transfer tax fees, repair credits, HOA fees, and mortgage payoff.
Are closing costs negotiable in Sacramento?
Yes. Many closing costs are negotiable. Buyers can request concessions from the seller; conversely, a seller can negotiate with the agent commission, escrow fee and service fees before closing.
Is the down payment considered part of closing costs?
No. These two charges are not the same. Both charges are typically to be paid by the buyer at closing, unless certain loan programs or seller concessions minimize those initial payments.
How can buyer closing costs be lowered in Sacramento?
Buyers can minimize their closing costs by comparing offers among different lenders, building a credit score, negotiating for seller concessions, and closing near the month-end to pay for less prorated interest.
Are closing costs lower for first-time buyers?
First-time buyers might benefit from California state programs that can reduce initial costs, such as grants and loans that fund a part of the down payment and closing costs.
