Budgeting for a Real Estate Transaction

Whether you are buying or selling a home, there are additional costs that you need to be aware of and budget for prior to the sale process. Once the contract is ratified, it will go to a Title Company. The Title Company is a neutral third party that will be managing the escrow and there is a fee for that. There is also a fee for Title Insurance which is based on the price of the home and the amount of the loan. You will also be signing a lot of paperwork for the conveyance of the title. This paperwork will be presented to you by a notary and there’s a fee for that as well.

 

If the home is in a Homeowners Association, there will be a fee to prepare the documents for the Buyer as well as transfer to the new owner – These items will have to be budgeted for. There is also a County transfer fee and in California, the fee is $1.10 per thousand dollars spent on the home. For example, if the home is sold for $500,000, then the county transfer fee will be $550.00. Depending on the area that you are in, there may be a city transfer fee and/or a city report that will need to be purchased.

 

The final fee is the commission for the REALTOR or REALTORS that are involved in the transaction. So who pays for these fees? There are 3 counties in California and every county does things a little different so there are various customary practices. It’s best to check with your REALTOR.

 

In my area, the Seller pays the commission to the REALTORS, the County and City transfer fees, as well as the HOA Documents and HOA transfer fee. The Buyer pays for Title Insurance as well as the notary fee and any inspections that they so choose to have done on the home.