How Closing Costs Work in Alameda County, and Who Pays What

Nearly all home buyers in Alameda County encounter closing costs. On a typical home purchase, these costs can add up to tens of thousands of dollars. So it’s important to understand who pays what between the buyer and seller.

How Closing Costs Work in Alameda County

The first thing home buyers need to know is that closing cost “customs” can vary from one county to the next. Below, we will focus on Alameda County in particular. But these guidelines and customs might not apply to other counties across California.

When you buy a house in Alameda County, you will likely be required to pay certain costs on the day you close the transaction. These are collectively referred to as closing costs. This umbrella term applies to the various fees, taxes and charges Alameda County home buyers and sellers pay when they close the deal.

You might also encounter some “non-lender” closing costs, such as escrow and title-related fees.

In Alameda County, home buyers usually have more closing costs than sellers do. This is true for most counties across the country. That’s because the buyer is the one assuming ownership of the home, and possibly using a mortgage loan to do so. So most of the services are performed on their behalf.

Average Closing Costs for Buyers

In Alameda County, as in most of California, the home buyer’s closing costs typically range from 1.5% – 5% of the purchase price. On a median-priced home (of approximately $1,140,000), that would come out to $17,220 – $57,400.

Why such a broad range? Because closing costs can be influenced by many different factors.

For instance, some home buyers might choose to pay discount points in exchange for a lower interest rate, while others might forgo this option. That’s just one of several variables that can influence the amount you have to pay when you close.

But you don’t have to guess! You’ll receive an estimate of your total costs when you apply for a loan, and a finalized breakdown a few days before the closing.

Who Pays What, Between Buyer and Seller?

In Alameda County, as in much of California, it’s customary for home buyers and sellers to pay their own individual closing costs. But it’s all negotiable. Ultimately, the two parties involved in the transaction will determine who will be paying for which closing costs.

The standard purchase agreement used in California typically has a clause similar to the one shown below. The paired parentheses () shown here would show up as a checkbox in the actual document.

In Alameda County, sellers can decide whether or not they want to pay a portion of the buyer’s closing costs. This kind of “seller contribution” is often used in a slower housing market, as an added enticement for buyers. On the other hand, these contributions tend to be less common in a hot market where multiple offers are common.

We will talk more about seller concessions below.

A Breakdown of Fees and Charges

As mentioned previously, both the seller and home buyer have their own individual costs they’re responsible for paying on closing day. In Alameda County, it usually works like this:

• Mortgage-related fees: The home buyer typically pays for these lender-based costs. And that’s logical, since it’s their mortgage loan. In Alameda County, buyers usually pay these loan-related charges on the day they close (or shortly before) via cashier’s check or wire transfer.
• Title fees: This is another common closing cost in Alameda County, and it’s usually the buyer who pays it. But they can also be split 50/50 between buyer and seller. These third-party fees cover specialized insurance policies that can protect both the lender and the buyer from title-related claims or disputes.
• Escrow charges: In Alameda County, home buyers usually pay for their own escrow-related fees. These fees can be lumped in with the other costs. Ultimately, they go to the title or escrow company that managed the closing process. The fees can cover paperwork, processing, and the exchange and distribution of funds.
• County transfer tax: This is a standard tax charged by Alameda County when homeowners sell their properties to someone else. The seller usually pays for the county transfer tax, but there can be exceptions to this. When this article was published, the base transfer tax in Alameda County was $1.10 for every $1,000 of the home’s value. (Example: $550 for a $500,000 home.)
• City transfer tax: In addition to the county tax, the buyer and seller might also have to pay for a real estate transfer tax assigned by the city. In Alameda County, it’s common for the buyer and seller to split the city transfer tax. Some cities in California don’t even charge a transfer tax. It varies quite a bit.

This list shows who pays which closing costs in Alameda County, in a typical transaction. But there can be exceptions to these customs as well. The buyer and seller usually iron out these important details during the offer and negotiating stage.

Asking for a Seller’s Concession

When buying a home, you’ll also have the option to ask for a seller’s concession. This is when you ask the seller to contribute money to help cover your closing costs or other purchase-related expenses.

In this scenario, the person selling the home concedes or gives something to the buyer, hence the term “seller concession.”

In Alameda County, home buyers can ask sellers to cover some or even all of their purchase-related closing costs. But just because you can do this doesn’t necessarily mean you should. If your offer has a lot of “strings attached,” the seller might be less inclined to accept it.

• Market Conditions: In a seller’s market, homeowners are generally less likely to agree to concessions since they often receive multiple offers. In a buyer’s market, on the other hand, the seller might be more willing to negotiate.
• Direct Competition: If there are multiple offers on the property already, asking for a closing cost contribution might weaken your offer compared to the others.
• Price Adjustments: Asking for closing cost assistance might prompt the seller to counteroffer with a higher purchase price, to offset their contribution. As a home buyer, you have to consider if you’re comfortable with this trade-off.
• Other Concessions: You might be able to negotiate other concessions, such as appliances or repairs, in exchange for a lower (or no) closing cost contribution.
• Mortgage Rules: Different loan programs have different limits on how much a seller can contribute. These limits typically range from 3% to 6% of the purchase price.

When in doubt, ask your agent. An experienced Alameda County real estate agent can advise you on whether or not it makes sense to ask for a concession, based on current market conditions in your area.

Seven Things to Take Away From This Guide

Here are the most important points you should take away from this guide:

• In Alameda County, both buyers and sellers have specific closing costs to pay. But buyers typically pay more due to their mortgage-related fees.
• The home buyer’s closing costs usually range from 1.5% to 5% of the purchase price, which could be significant given the high property values in the area.
• Closing cost customs and norms can vary by county. So what’s typical in Alameda County may not apply elsewhere in California.
• The county charges a base transfer tax paid by the seller, with an additional city transfer tax that is often split between buyer and seller.
• Buyers can request seller concessions to help cover their closing costs. But the likelihood of getting them to agree will largely depend on local market conditions and competition.
• While there are customary practices, all closing costs are negotiable between the buyer and seller. The two parties usually iron out these details during the offer and negotiation stage.
• Different mortgage programs have limits on how much a seller can contribute to closing costs, typically ranging from 3% to 6% of the purchase price.