Real Estate Insights

Q: I am purchasing a Foreclosure property and the Seller will only pay up to $1,150 of my escrow fees. How do I determine what my escrow fees will be?

A: Escrow services, which make up the settlement services, are performed by a neutral third party entity. In California these settlement services are handled by title and escrow companies while in other states they may be handled by a combination of a title company and real estate attorneys.

Escrow fees account for the charges that the title and escrow company will charge the buyer and seller in a real estate transaction. To name a few, escrow fees may be comprised of title insurance fees for both the new owner and for any new lenders, settlement service fees, document preparation fees, recording fees, notary fees, and government fees (since escrow collects any city or county transfer taxes associated with the sale).

Please keep in mind that not every title and escrow company will charge the same fees or same rates, and certainly every transaction will have different fees. For instance, if the subject property is a condominium then there may be additional homeowner’s association dues and transfer fees that must be paid.

Regarding how much you may expect these fees to be, every county in California has a different customary way for splitting the costs of the settlement services between the Buyer and the Seller. In Santa Clara County, the Seller pays for the full escrow fee, the new owner’s title insurance policy, and for any county transfer taxes. While in San Mateo County the reverse is true and the Buyer pays for all the settlement services except the county transfer tax. To figure out what settlement services you may expect to pay depending on what county the subject property is located in, please visit: http://www.eaglehomegroup.com/HomebuyersGuide

The best way to get an idea of what your closing costs my be is to contact the title and escrow company handling your settlement services and ask them to provide you with an estimated closing statement. Be sure that they have a copy of your purchase contract and they should be able to provide you with a fairly accurate figure.