Who Pays Closing Costs in Claremont?

Short answer: some items are customarily allocated one way, all of them are negotiable, and the purchase agreement is what actually decides. Custom is a default, not a rule, and it is routinely traded during negotiation.

This article explains the categories, who normally carries each one, and where the real negotiation happens. It does not quote amounts, because the figures move, they differ by service provider and property, and a number from a website is not a number from your escrow officer. Ask escrow and your lender for a written estimate on your specific transaction, and treat that as the authority.

How the allocation actually gets decided

In a California residential sale, the purchase agreement contains provisions allocating specific costs between buyer and seller. Regional custom informs the standard form's defaults, and then the parties negotiate around them.

That is the important point for anyone reading this ahead of an offer: WHO PAYS WHAT IS A TERM, LIKE PRICE. In a competitive situation a buyer may offer to absorb items customarily paid by the seller. In a slower situation a seller may agree to credit the buyer toward costs. Neither is unusual. Both are ways of moving value around without moving the headline price.

Nothing here is legal advice, and the allocation in your contract is a legal document. Take specific contract questions to your own attorney.

Costs typically associated with the seller

Brokerage compensation. Compensation arrangements are negotiable and set out in written agreements. Discuss yours with your agent directly rather than assuming a customary figure exists.

Owner's title policy. In much of Southern California the seller customarily provides the owner's policy that insures the buyer's title, though this is one of the items that regularly moves in negotiation.

Transfer taxes. County and, where applicable, city documentary transfer taxes are set by statute and local ordinance. Rates and any city-level charges should be verified with the county recorder and the city for the current period, since ordinances change.

A share of escrow fees. Escrow fees are commonly split, with the exact division depending on the agreement and the escrow company's schedule.

Statutory reports and required disclosures. The natural hazard disclosure report and other required items are typically ordered on the seller's side. The disclosure framework itself is in California seller disclosures.

Prorations and payoffs. Property taxes are prorated to the closing date, existing loans are paid off, and any association dues are prorated. Association document delivery on a property with an association is normally a seller-side item; see does Claremont have HOAs everywhere.

Anything agreed as a credit. Repair credits and closing cost credits are negotiated outcomes and appear on the seller's side of the settlement statement.

A fuller seller-side picture is in what it really costs to sell a house in Claremont.

Costs typically associated with the buyer

Loan costs. Origination and lender fees, points if any, the appraisal ordered by the lender, credit reporting, and any prepaid interest. Your lender must provide standardized disclosures of these; read them and ask about anything you do not recognize.

Lender's title policy. The policy protecting the lender's interest is customarily the buyer's, separate from the owner's policy.

A share of escrow fees, plus recording fees and notary charges.

Inspections. The buyer chooses and pays their own inspectors, which is exactly as it should be, because those reports are for the buyer's benefit.

Impounds and prepaids. Where the loan requires an impound account, the initial deposit for taxes and insurance is collected at closing, along with the first insurance premium.

Association transfer and setup charges where a property has an association.

Where the negotiation actually happens

Three places, mostly.

The offer itself. A buyer can ask for a credit toward closing costs, and a seller can counter with a lower price and no credit, or the reverse. Which structure is better depends on the loan, so ask your lender before choosing, because a credit and a price reduction do not affect a loan the same way.

After inspections. Requests for repairs frequently resolve as credits rather than work, particularly on older Claremont homes where a buyer would rather choose their own contractor than accept a rushed repair.

Late problems. Insurance difficulty on a foothill parcel, a title exception, an appraisal that comes in differently than expected. All of these get resolved partly through who pays for what.

The items people forget entirely

Two categories catch people out, and neither is exotic.

Prorations. Property taxes, and association dues where they apply, are divided between the parties at the closing date rather than paid in tidy annual blocks. Depending on where the closing lands in the tax calendar, that proration can be larger than expected in either direction. Ask escrow to show you the proration line specifically.

Moving and carrying costs on both ends. These are not closing costs on any settlement statement, which is exactly why households underbudget them. Overlap between a sale and a purchase, storage, movers, utility transfers and the first round of work on a new-to-you older house all land in the same few weeks. Plan for them as part of the true cost of moving.

What to do before you sign anything

Buyers: get a written estimate from your lender early and ask escrow for a preliminary settlement estimate. Then ask the specific question, what is my total cash to close, and get the answer in writing.

Sellers: ask for a net sheet before you list, not after you accept an offer. Knowing your approximate net changes how you evaluate offers, and it removes the worst surprise in the process.

Both: verify current transfer tax rates with the county and city rather than relying on any published summary, and take contract and tax questions to your own attorney and CPA.

Related reading: is now a good time to buy in Claremont. More local questions are on the Claremont real estate FAQ hub. Anthony Grynchal has been licensed in California since November 2009. He is a licensed real estate salesperson, not an appraiser, attorney or CPA; this is general information, not legal or tax advice.