Who Pays What?

If you’re reading this, you probably know that The Columbian does an extremely good job of covering real estate matters. Just a week ago, though, the paper ran a column by Kenneth Harney titled “Closing costs can bust budget,” that may give some readers the wrong idea about closing costs, due to regional differences in who pays which costs.

So . . . who pays what? Mr. Harney’s column cited King’s County, New York (Brooklyn) and Washington, D.C., pointing out that an average homebuyer there pays $57,000 and $20,000, respectively, in closing costs! I’d hate to think that local Buyers might be scared off by those numbers, so they should know: Clark County buyers’ costs are not anywhere near that! The difference is two BIG factors: (1) the average home price in those markets is nearly 3 times the price in our market, and (2) the Seller (not the Buyer) typically pays the transfer tax (called Real Estate Excise Tax or REET) in Washington State. I’m not minimizing the expense of REET, as it is 1.78% of the sales price, but think it’s important for potential Buyers to understand that REET is NOT one of the fees they pay.

What fees do Buyers pay? Typically, they pay to record the deed that transfers title (ownership) to them, and to record the Deed of Trust if they are getting a loan. These costs are usually less than $250. Buyers pay for title insurance if they are getting a loan, with the cost determined by the amount of their loan and less than $1,000 if their loan is less than $1 million. Buyers pay for one-half of the escrow fee, based on the sales price and (for our company) $800 if the sales price is $1 million or less. In addition to the $2000 in costs listed here, there are fees collected at closing for lender costs like the loan origination fee, appraisal, credit report fee, and other amounts like a few months of taxes and insurance so that the lender can pay the property taxes or homeowner’s insurance when due. The best way to estimate these lender fees is to speak with one or more of the excellent mortgage lenders in Clark County and get prequalified BEFORE you go house-shopping!

As you can see, the Buyer’s closing costs in Clark County typically total a few thousand—not $57,000 or even $20,000. While many of my columns have encouraged homebuyers—and Sellers- to consult with professional Realtors (advice I repeat here), IF YOU ARE CONCERNED ABOUT DOWN PAYMENT, CLOSING COSTS, AND HOW MUCH HOME YOU CAN AFFORD, don’t guess and don’t be shy! Call a LOCAL mortgage lender!

And, if you have any questions about title and escrow fees or real estate transactions generally, feel free to give me a call. We’d love to be a part of your successful transaction, and the professional title and escrow people of Clark County Title are happy to assist you!

Scott Hogan
Clark County Title
Scott@ClarkCountyTitle.com

360-694-4722
1400 Washington St, Ste. 100
Vancouver, WA

360-787-9197
3200 SE 164th Avenue, Ste. 219
Vancouver, WA 98683