"Hidden" Costs

Happy New Year! I hope the New Year brings nothing but joy and happiness to you and your family.
As we begin 2016, I would like to wrap up The Coveted Offer series with the last few items that many buyers often overlook, fees. Unlike the last two newsletters, this one in particular is dictated by market norms (but that does not necessarily mean they have to be followed).
We are going to focus on four main fees:

  1. City Transfer Tax
  2. County Transfer Tax
  3. Escrow Fees
  4. Owner’s Title Insurance Policy

Let's look at an example - assume we are purchasing a single-family home in San Mateo, CA for a total purchase price of $1,000,000.
For San Mateo, it is common practice for the seller to pay the Country Transfer Tax. County Transfer Tax fees are usually based on a tax per $1,000 (with almost all counties charging $1.10 per $1,000). In this example, the seller will need to pay $1,100 for the County Transfer Tax fee. For the City Transfer Tax, the City of San Mateo charges $5.00 per $1,000 and the amount is split between the buyer/seller. In our example, the total City Transfer Tax fee is $5,000, with the buyer and seller each paying $2,500. Some cities do not charge a Transfer Tax Fee, while San Francisco charges $25.00 per $1,000 on purchases over $10MM.
For the Escrow and Owner’s Title Insurance Policy in San Mateo, the buyer typically pays both. With 20% down (i.e. a mortgage of $800,000), the fees are as follows:
Base Escrow Fee: $1,450
Concurrent Loan Charge: $250
Owner’s Title Insurance Policy: $2,431
Lender’s Title Insurance Policy: $922
If you take into account all of the transfer fees/title/escrow, the buyer will need to bring an additional $7,500 to closing.
Other common items also include Prorations of Property Taxes, Home Warranty Charges, HOA Transfer Fees, and Legal Fees (if any).

If you ever have any questions at all, please do not hesitate to reach out. At MinnGo, we realize that real estate is not something our clients think about everyday. Lucky for you, that is what we live and breath.

Until next time.