Home Sellers and Buyers Both Pay Closing Costs in Sacramento

Should the seller pay a Sacramento buyer’s closing costs? Probably not in our present real estate market unless the price is increased to cover the seller’s loss, and that opens another can o’ worms because the home still needs to appraise at that higher price. If it doesn’t appraise at that new value, the transaction might not close unless one side or the other caves. There is often a risk associated with raising the sales price. If you spot a seller openly offering to pay closing costs, though, that’s telling you there is a lot of room in negotiations to squeeze.

Most home buyers don’t immediately think about the closing costs they have to pay to buy a home just like many home sellers often don’t think about the closing costs they need to pay to sell a home. Well, of course, sellers zero in on that commission since it’s a big chunk of change and can spend a lot of time focusing on that number rather than considering how much they will save on the back-end by hiring a more experienced Realtor who doesn’t offer discounts, but I digress.

Because there are many home sellers who never knew they had to pay seller closing costs, just like there are buyers who have no idea, either. Buyers realize a down payment is required but closing costs are an additional expense. Each has their own side of closing costs to pay. Third-party hands are stretched out and open. Some fees are routinely split, depending on local custom. I’ve had sellers ask: why am I paying for the buyer’s title insurance policy? Good question. Because it’s customary and buyers expect a seller to pay for it in Sacramento, plus the seller typically chooses the title and escrow company. I run into agents from Placer County, of course, who practice the flip. If a buyer’s agent is uncertain, an agent should inquire.

Once in my real estate life, many moons ago, I’ve had a buyer offer to pay all of the closing costs in a transaction, both sides, with the exception of the commission — but that was due to an incredibly lowball offer from the buyer. The buyer was encouraged to offer a concession somewhere to make the transaction work. If you were buying an $800,000 home for $600,000, I think you might offer to pay all the costs of sale as well. Otherwise, it sounds like you’re nickel and diming the seller to death, and you would be. Once you plunge in that knife, don’t twist it, you morbid SOB.

Sellers also ask why do I pay for a natural hazard disclosure? Because it’s required by law, and you must provide it to the buyer. In short sale situations, sometimes banks don’t want to approve all short sale closing cost fees because they don’t understand California law. I typically force that approval of payment from the bank, even though it’s only 99 bucks. It’s the principle. Typically, the closing costs for a seller range from about 1% of the sales price to 2%. Whereas a buyer’s closing costs run closer to the 3% range, depending on impounds.

Sellers can spot most of their fees in the purchase contract. They can also ask their Sacramento listing agent to prepare a net sheet, itemizing those fees. Buyers need to get their fees from their lender, if they are obtaining a loan, because most of the fees a buyer pays to close escrow involve the loan: the 800 fees on the HUD.

I do see a movement in how closing costs in Sacramento are divided, though, and it’s toward buyers and sellers splitting the escrow fee and splitting the city transfer tax. About 10 years ago, it was very common for sellers to pay those fees, but it doesn’t hold true today. You might ask your agent about splitting those fees in a purchase offer, especially if you’re submitting offers that are getting rejected. Not every real estate agent in Sacramento cares about nor looks for trends in real estate, much less about how closing costs in Sacramento are handled.