When you buy or sell a property, there are fees that must be paid by the buyer and/or seller, but who pays for what? The answer to this question varies.
There are no “official rules” for payment of closing costs. The fees paid by each party in the transaction can vary by location and are guided by local custom/practice as well as negotiations during the offer process.
Within the state of California, there are two regions with opposing customs in regards to who pays which fees. In Northern California, the buyer typically pays for the escrow fees and title insurance, while the seller pays the property transfer tax. In Southern California, this allocation of costs is reversed with the seller paying for the escrow fees and title insurance and the buyer paying the property transfer tax.
Since escrow fees and title insurance are considerably more than transfer tax, sellers in So Cal who then buy in No Cal often get stuck with the highest of fees in both transactions. In turn, buyers moving south often reap the benefits in both transactions!
If you are a buyer, you’ll want to specify your request for who pays what fees in your initial offer to purchase. If the seller does not agree to what you are asking, this is the time to negotiate who will pay for what in counter offers. Likewise, if you are the seller, you want to read the full offer contract to see what you’ll be expected to pay during the transaction.
Keep in mind: ALL fes are negotiable in a real estate transaction, customary or not, so you can present an offer however you wish.