Whether you’re buying or selling real estate in Charleston, South Carolina, closing costs are something you have to deal with. These costs are the biggest upfront expense for buyers after the down payment, and sellers pay the bulk of the agent commissions.
It’s important, then, to understand what costs you’ll face when you finally get to the closing table.
Don’t be taken by surprise at closing. Read on to discover what lies ahead so you can prepare accordingly for Charleston closing costs.
Cost of Closing At a Glance
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First, though, let’s examine the typical closing costs in Charleston and everywhere else.
“Closing costs are the thousands of dollars in fees associated with a mortgage, typically amounting to 2 percent to 5 percent of the loan principal. There are various closing cost components and they vary from state to state. Some closing-related items can be negotiated by the borrower.”
The exact amount you’ll pay varies, being determined by several factors. But to help you know what to expect, “[t]he average total for closing costs on single-family homes in the U.S. in 2019 was $5,749, including taxes.”
Closing expenses typically fall into two broad categories: 1) property-related fees and 2) mortgage-related fees.
Fees Related to the Property
These “cover expenses your lender incurs in evaluating the property you’re financing” and include the following:
- Appraisal fee
- Inspection fee
- Title search
- Title insurance
Fees Related to the Mortgage
These fees “cover the cost of processing your application” and include:
- Credit report fee
- Origination fee
- Application fee
- Underwriting fee
- Local fees
- Legal fees
Buyer Closing Costs
For buyers, the largest portion of the costs of closing is that having to do with the mortgage . . .
- Title insurance – Protects the buyer in the case of liens or clouds on the property subsequent to the sale
- Mortgage preparation – Fees paid to the lender for generating and drafting the mortgage loan
- Buyer’s consents – Includes things like inspections
- Homeowners insurance – A certain portion of the premiums to be paid at closing
- Notary fees – Assessed when closing documents are signed somewhere other than an escrow office
- Government recording fees – For deed and mortgage recording at the appropriate Bureau of Conveyances
- Escrow and title document preparation fees – Typically split 50/50 by buyer and seller
- HOA dues – Usually, two months’ worth of prepaid dues
Seller Closing Costs
The costs for sellers typically include . . .
- Mortgage loan payoff – To be paid off in full at the closing settlement
- Agent commissions – Usually paid by the seller, but the buyer often pays too
- Transfer taxes/recording fees – Imposed by state/local government for transferring title
- Escrow fees – Paid to the title company for performing the title search and preparing documents
- Attorney fees – Paid for legal representation at the settlement
- Survey fees – Most often for single-family dwellings to verify boundaries and determine whether there are encroachments
- Liens/judgments – Usually in the form of unpaid HOA dues and/or prorated property taxes and included in the settlement fees.
Closing Costs in South Carolina and Charleston
As is the case anywhere, the exact closing costs in South Carolina and Charleston depend, in large part, on the lender and the market, as well as on the type and price of the property, of course. Typically, though here’s about what you can expect to pay . . .
Buyer Costs
- “Closing attorney: Varies
- Title search: $300
- Title insurance
- Appraisal fee: $200 to $400
- Property inspection fee: $300 to $700
- Recording fee: Usually $10 for the first page; $8.50 for additional pages
- Origination fee
- Surveying fee: $200 to $800 based on size of land
- Settlement fee: $200
- Property tax: Prorated at closing
- Condo/HOA fees (if applicable): Prorated at closing
- Flood certification: $10
- Credit report: $25
- Recording of the mortgage (deed of trust) fee: $35
- Homeowners insurance
- Mortgage insurance — if down payment is less than 20%
- Archive and courier fee: $50 to $100
- Miscellaneous condo fees: Varies”
Seller Costs
- “Broker fees: Usually 6% of sales price
- Own attorney: Varies
- Title insurance on buyer:
- $2.75 per $1,000 up to $100,000
- $1.75 per $1,000 up to $100,000
- Deed recordation tax: $2.60 per $1,000 of sales price
- State deed stamps: $1.10 per $1,000 of sales price
- Property tax (if applicable): Prorated at closing
- Document preparation fee: $150 to $250
- Recording fees: Usually $10 for the first page; $8.50 for additional pages
- Mortgage payoff: Subject to loan balance
- Courier and wire transfer fee: $20 to $50
- Condo/HOA fees (if applicable): Prorated at closing
- Miscellaneous condo fees: Varies”
Special Closing Considerations for South Carolina and Charleston
The cost of closing for South Carolina as a whole and Charleston in particular comes in at 1.09% to 1.66% of the purchase – Much lower than the national average.
The average home sells in the price range of $200,000 to $300,000. For a home in that price range, closing costs will come in at between $2,480 and $3,720 (before taxes). The fees involved “cover closing attorneys and title insurance, as well as property inspection, appraisal and origination services.”
In addition, some homeowners may “need to pay for mortgage insurance and flood certification, or post HOA or condo fees. Many of these fees are negotiable, but taxes aren’t. Like all states, South Carolina charges property and transfer taxes.” You can, then, “expect to pay around $3,269 in closing costs after taxes.”
That sounds like a pretty hefty chunk of change. But keep in mind that the cost of closing for Charleston and the state of South Carolina is one of the lowest in the country. In fact, for these costs before taxes, the state comes in at a rank of 41.
But there is one fee that buyers/sellers won’t encounter in some other states. And that is the attorney fee as the result of South Carolina’s requirement that properties be closed with an attorney. Typically, the buyer selects the attorney. The seller can use the same attorney or choose her own.
The Agent Advantage
Currently, the Charleston real estate market is booming. Add to that the fact that that closing costs average just 1.17% of the purchase price, and it’s plain to see that buying or selling a home in Charleston is a smart move right now.
Still, the best course is to have an experienced local agent in your corner. With homes selling for upwards of $200,000, even those low closing costs can add up to a substantial amount. A good local agent, though, can help you negotiate a better deal. So don’t take a chance.
Be sure to use a premier agency with a dedicated team of experienced real estate professionals with extensive experience working in Charleston, SC, and its surrounding areas.