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Contra Costa County Transfer Tax
The party that is handling the transfer or conveyance of title to a property usually handles the payment of transfer tax. Certain jurisdictions have different rules about who pays, but it generally comes down to the buyer and seller to decide who handles it. Traditionally, in the State of California, the seller pays the transfer tax.
Definition and Purpose of Transfer Tax
Transfer tax is imposed by states, counties and cities. The tax is applied upon the transfer of the title of a property from one entity to another within the relevant jurisdiction. Essentially, it is a government tax on the transfer of a legal title from seller to buyer.
Calculation of Transfer Tax
There is a base transfer tax in Contra Costa as well as other California counties. It stands at $1.10 for every $1,000 of the value of the property in question. As noted, this is usually paid by the seller. However, in a strong seller’s market, the seller may prioritize buyers who agree to pay the Contra Costa County transfer tax. Payment of transfer taxes can sometimes become a negotiating point.
Examples of Transfer Tax in Contra Costa County
Given the base rate of transfer tax in Contra Costa, a typical calculation would be as follows:
- The sale price of the property is $500,000
- The transfer tax is calculated as 500 x 1.10
- The total amount of transfer tax stands at $550
- This would usually be paid by the seller, but an alternative agreement may be made
Closing Costs For Sellers In Contra Costa County
Sellers need to pay various closing costs in Contra Costa County. It’s important to have an understanding of these in order to prepare fully for what to expect. This section provides an outline of the closing costs for sellers and what they mean.
They are as follows:
- Real estate commission
- Title and escrow fees
- Transfer taxes
- Home warranty
- Outstanding liens and judgments
Typical Closing Costs for Sellers in Contra Costa County
Both buyers and sellers have individual costs to cover on closing day in Contra Costa County. Some of these may be up for negotiation as part of the real estate deal. As such, the following is not an exhaustive list of costs the seller might incur.
However, the following is a list of the common costs for sellers.
Real Estate Agent Commission
This is the percentage that the real estate agent takes to pay for their service in finding a buyer for your property. This will vary from one agent to the next, and it is something you should be aware of from the start of your dealing with your agent.
Title and Escrow Fees
Title fees may apply to the seller, depending on the agreement with the buyer. They pay for insurance policies designed to protect lenders and buyers from claims against the property relating to the title. Escrow fees may also apply, though they are more often associated with the buyer. These are fees the escrow company charges for everything related to releasing funds at the point of closing.
As previously mentioned, this is a standard tax charged by Contra Costa County. It is a tax on the transfer of property, charged at $1.10 for every $1,000 of the home’s value. This is usually paid for by the seller, but there are exceptions. These usually occur when an alternative arrangement is made between buyer and seller.
Home warranty exists to reduce out-of-pocket costs for things like repairs and replacements within the property. These costs are not covered by homeowner’s insurance. This warranty is usually arranged and paid for by the buyer as it is aimed at reducing their headaches. It comes as an annual or monthly payment.
Outstanding Liens and Judgments
These will not be relevant to every property transaction. But if there are any outstanding liens or judgments against a property, they must be settled before the property can be sold. This will be the responsibility of the seller unless otherwise agreed with the buyer. Find more information about liens from the State of California Franchise Tax Board.
Closing Costs For Buyers In Contra Costa County
Buyers also have a number of closing costs to attend to in Contra Costa County. As with seller’s costs, there are those that are usually specific to buyers. However, with room for negotiation on many, there can be specific arrangements that change which costs relate to buyers.
The following costs are the ones that most commonly apply to buyers. Be advised that some of them may be paid before closing.
Title and Escrow Fees
Title fees pay for insurance to protect lenders and buyers from title-related claims against the property. Escrow charges cover the costs of the escrow company that holds and releases the funds for the purchase. Both of these costs are typically paid by the buyer. However, there are instances where arrangements are made for the seller to cover one or both of them.
Home Inspection Fees
It is always recommended to have home inspections carried out before buying a property. This can ensure any current or future problems that might affect the value of the property are identified. It is the buyer’s responsibility to arrange these inspections and it is down to them to pay for them as well.
A formal appraisal is required by mortgage companies to ascertain the true value of the property. Even with transactions where no mortgage is involved, it is recommended to have an appraisal carried out. This protects the buyer from overpaying for the property. It is the buyer that covers the cost of the appraisal.
Loan Origination Fees
These fees relate to the mortgage and are covered by buyers since it is their mortgage loan. They are charges that the lender accrues in arranging the loan and they are covered by the recipient of the loan.
Property Taxes and Insurance
Property tax in Contra Costa varies depending on a number of factors like the surrounding area, the size of the property and more. This tax is paid for by the homeowner, so it applies to the buyer once the transaction is completed. Homeowner’s insurance is another important consideration, particularly if you have a mortgage. This will be another important cost for the buyer.
Escrow Fees In Contra Costa County
Escrow is a conduit between seller, buyer, agent and lender. The Escrow Company holds the money that will be used for the property purchase and handles the coordination and distribution of the funds. Once the transaction closes, the funds are released from escrow to the seller to complete the process. The company handling escrow charges for this service.
By way of example, escrow fees in Contra Costa are usually calculated at $2 for every $1,000 of the sale price, plus $250. In exchange, the escrow service ensures that the seller doesn’t receive payment and the buyer doesn’t receive the property until everything in the contract is executed.
Escrow fees in Contra Costa County are almost always covered by the buyer. In some California counties, it is a 50/50 split, while in others the seller covers the cost. It may be possible to negotiate a different arrangement if both buyer and seller are willing.
Contra Costa Real Estate Commission
The role of real estate agents in Contra Costa is to find buyers for a property. They are appointed by the seller and they work to market the property and nurture potential buyers to make the sale. They take payment for this service via commission – that is, they take a percentage of the overall sale value upon completion. This is called the real estate commission.
Real estate commission rates vary from one agent to the next. There can be substantial differences between counties, towns and states. In Contra Costa, the average real estate commission rate is between 5 and 6 percent.
Real estate agents usually state a commission rate that they work at. However, there is often room for negotiation on this figure. Naturally, for sellers, a lower commission rate is attractive. However, be advised that agents who charge a higher commission are likely to offer a higher standard of service. Do your research and attempt to negotiate the commission rate down if you think it is appropriate.
Frequently Asked Questions
Yes, sellers in Contra Costa usually cover real estate commission, transfer taxes and outstanding liens or judgments.
Yes, buyers also face a number of closing costs in Contra Costa. These may include title and escrow fees, home inspection fees, appraisals, loan origination fees and property tax/insurance.
Yes, they are typically charged at $2 per $1,000 of the sale value plus $250 and they buyer usually pays them.
Yes, real estate agents in Contra Costa charge a commission for their services on any property transaction. This fee is paid by the seller and the rate usually comes in at between 5 and 6%.