23 Feb Who Pays What-Typical Closing Costs
How buyers and sellers in San Francisco split the closing costs pertinent to the sale of real estate is ultimately decided in the purchase contract itself, but this list details how they are typically split in San Francisco County.
Very generally speaking, a buyer can expect that closing costs will run anywhere from 1% to 3% of the purchase price, the major variable being the loan points charged, if any, by their lender. Other than loan-related fees, the big costs for buyers are for escrow fees and title insurance, home inspections, the first year of hazard insurance and property tax pro-rations, if any.
For sellers, closing costs usually run in the range of 6% to 8% of the sales price, not including loan pay-off and any home preparation or repair costs. Typically, the largest seller costs are brokerage commissions and transfer taxes.
Here is the standard clause governing closing costs in the SFAR purchase contract (Revise date 10/09). Again, buyer and seller can agree to change how these costs are divided.
“PRORATIONS AND EXPENSES. The following shall be paid current and then prorated between Buyer and Seller as of Close of Escrow: real property taxes (based upon the latest information available regarding the assessed value of the Property and the applicable tax rate); bonds and assessments; Homeowners’ Association dues and assessments; interest on any loan(s) secured by the Property assumed by Buyer; premiums for any insurance on the Property assumed by Buyer; rents; and operating expenses. Security deposits and accrued interest thereon, where the law requires interest to be paid on security deposits, shall be credited to Buyer’s account at Close of Escrow. Buyer shall pay the escrow fee and title insurance premiums. Seller shall pay any real property transfer taxes. Buyer shall pay any Homeowners’ Association transfer fees and move-in fees. Seller shall pay any Homeowners’ Association move-out fees. Seller shall pay any prepayment penalty or other fees or charges imposed by lenders for loans being paid off through escrow. Unless specified in this Contract, all other prorations and expenses shall be paid by either Buyer or Seller in accordance with local custom. Buyer and Seller understand that the Property will be reassessed upon change of ownership. A supplemental tax bill will be sent to Buyer which will reflect a change in property taxes based on the Purchase Price becoming the new assessed value. Any tax bills issued after Close of Escrow for periods of time before Close of Escrow shall be paid by Seller.”
The information below is from the website of the San Francisco Assessor’s office, as of April 2013:
Property Taxes in San Francisco
Under State law (Proposition 13), real property is reappraised only when a change-in-ownership occurs, or upon completion of new construction. Except for these two instances, property assessments cannot be increased by more than 2% annually, based on the California Consumer Price Index. The property tax rate is 1% plus any bonds, fees, or special charges.
What is the Transfer Tax Rate for the City and County of San Francisco?
If entire value or consideration is:
More than $100 but less than or equal to $250,000, the tax rate is $2.50 for each $500 or portion thereof;
More than $250 but less than $1,000,000, the tax rate is $3.40 for each $500 or portion thereof;
$1,000,000 or more but less than $5,000,000, the tax rate is $3.75 for each $500 or portion thereof;
$5,000,000 or more but less than $10,000,000, the tax rate is $10.00 for each $500 or portion thereof;
$10,000,000 or more, the tax rate is $12.50 for each $500 or portion thereof.
Interested parties should independently confirm the details contained herein.