Closing Costs in Washington State

Talia Lee-
July 03, 2024

Closing costs are an inevitable part of finalizing a real estate transaction, encompassing expenses incurred right before the deal is sealed. These costs generally range from 2 to 5 percent of your loan amount, separate from real estate agent commissions.

In Washington, like in other states, both buyers and sellers shoulder specific responsibilities for these fees and expenses. While buyers typically cover costs related to financing and loan origination, sellers also have their obligations. Here’s a breakdown of what to expect regarding closing costs in Washington and how these expenses are allocated between parties.

Closing costs can fluctuate significantly from state to state. In Washington, recent data from CoreLogic’s ClosingCorp suggests that closing costs typically amount to around 2.4 percent of the home’s price, excluding real estate agent commissions. This figure is relatively high compared to neighboring Oregon, where it’s approximately 0.9 percent.

As of February, the median home price in Washington state stood at $617,500 according to Redfin. Applying the 2.4 percent calculation to this median price yields estimated closing costs of $14,820. However, actual costs can vary based on the specific location and the purchase price of the home. For example, in Bellevue, where the median home price is $1.5 million, closing costs would be around $36,000. Conversely, in Spokane with a median home price of $369,950, closing costs would be significantly lower at approximately $8,878. Remember, these costs are typically shared between the buyer and seller.

In every state, including Washington, both buyers and sellers are responsible for a portion of the closing costs. The specific amounts can vary based on local regulations and negotiations. Here’s a breakdown of the typical costs each party covers:

Buyers typically cover a wide range of closing costs, many of which are associated with their mortgage. Here are some of the fees and expenses buyers are responsible for:

  • Lender-related fees: Mortgage lenders often charge a loan origination fee, along with other fees related to processing your loan application and conducting credit checks.
  • Appraisal: A professional home appraisal is usually required by lenders to ensure the home’s value aligns with the loan amount. Appraisal costs can range from several hundred to over a thousand dollars.
  • Home inspection: While not mandatory, it’s advisable for buyers to conduct a home inspection to uncover any major issues before finalizing the purchase. Inspection fees typically amount to a few hundred dollars.
  • Title-related fees: Buyers may incur charges for a title search and title insurance, which protects against ownership disputes or liens on the property.
  • Escrow: Buyers might need to place a deposit into an escrow account to cover prepaid property taxes or homeowners insurance. There could be a fee associated with managing this escrow account.

These costs can vary depending on the location and specific terms of the transaction, but they are essential considerations when budgeting for a home purchase.

Sellers may not have as many types of closing costs as buyers, but their overall expenses can still be substantial. Primarily, sellers are responsible for paying real estate agents’ commissions under the current commission system (expected to change in July with new rules), typically ranging between 5 and 6 percent of the home’s sale price. For instance, on a median-priced $617,500 home in Washington, 5 percent equates to $30,875.

Other common closing costs for sellers include:

  • Escrow: Sellers may share the escrow costs, with the exact amount usually determined during negotiation of the purchase agreement.
  • Real estate excise taxes (REET): Washington imposes an excise tax on real property sales, typically the responsibility of the seller. The rate varies by county, usually ranging from about 0.25 percent to 0.5 percent of the property’s sale price.
  • Property taxes and HOA fees: Sellers typically pay any property taxes due up to the closing date, as well as any outstanding HOA fees if applicable.
  • Owner’s title insurance: In Washington, sellers typically cover the cost of this insurance policy, which generally amounts to about 1 to 5 percent of the home’s value.
  • Concessions: Sellers often agree to concessions during negotiations, such as covering the cost of necessary repairs, which are settled at closing.

These costs can vary based on the specifics of the transaction and local regulations, so sellers should be prepared for these financial obligations when selling their home.

Except for taxes and fees mandated by government entities, many expenses in the final stages of a real estate transaction are negotiable. For sellers, negotiating real estate commissions, their largest expense, is possible by discussing with their agent to potentially reduce the percentage.

Negotiation outcomes are influenced by market conditions. In a seller’s market, where demand exceeds supply, buyers may have less leverage to negotiate. Conversely, in a buyer’s market, sellers might find themselves at a disadvantage.

Homebuyers can explore closing cost assistance programs offered by local governments, which can reduce upfront expenses. These programs are often targeted at first-time buyers and may also assist with down payment costs. Washington state provides several such programs designed to alleviate the financial burden of purchasing a home.

Engaging a real estate agent well-versed in the specifics of your local Washington market can be invaluable, whether you’re buying or selling a property. If you haven’t partnered with a Realtor before, seek recommendations from friends and family who’ve had positive experiences. Before making a decision, thoroughly vet several candidates by asking pertinent questions and reviewing online feedback from their previous clients.

Review : 4.4/130
Thank you for your review 😘