Closing Costs and Realtor Fees Here’s How Much You’ll Pay in Charleston, SC
Buying a home in Charleston is an exhilarating and rewarding experience. This part of South Carolina is gorgeous, with exciting food, top-notch properties, and numerous fun things to do. If you're looking at properties online, you should know that the price you see is not the final price you'll pay. In slower markets, you can negotiate a discount; in hot markets, you may need to pay above the asking price. However, regardless of the market, the buyer and the seller must pay some fees and closing costs.
The good news is that these fees are not significant. The bad news is that most of these fees are unavoidable (or unadvisable to try to avoid paying). If you're buying or selling a home in Charleston, here's what you can expect to pay in closing costs and Realtor fees.
Common Closing Costs in Charleston, SC
Closing costs are the various costs associated with finalizing a real estate transaction. Depending on the terms negotiated in the purchase agreement, these fees can be paid by the buyer, the seller, or both.
Here's a list of the seven most common fees on a purchase document, including who typically pays them unless you negotiate differently.
1. Appraisal Fee (Buyer)
Before the bank can issue a loan, it must be confident that the property underwriting the loan has enough value. Legally, nothing stops someone from offering to buy a $200,000 property for $2 million, but it certainly would not make sense for the bank to issue such a large loan on a property that's only worth a mere fraction of the offer.
The bank orders an appraisal to ensure the value underlying asset is equal to or greater than the offer amount. During this process, the appraiser will survey the property and look for comparable properties in the neighborhood. They'll use statistically-valid methods to ensure that the offer on this property is in line with other homes in the area. The only way to avoid this fee is to pay for a home in cash.
For Charleston, SC, homes, appraisals typically cost between $300 and $500. The buyer must pay the fee, but the lender selects an appraiser they trust to go out and look at the property.
2. Home Inspection Fee (Buyer)
Unless the buyer explicitly waives this contingency (and it is generally not a good idea to do so), the buyer will usually arrange for a home inspection. During this process, an inspector will look at the property to document what needs fixing. An inspector is very valuable, as they can find issues that may require costly repairs before completing the purchase.
Home inspection costs typically range from $300 to $500, but they are worth it. The buyer can sometimes use the repairs noted by the inspector as leverage to request a reduction in the sale price. An experienced real estate agent can walk the purchaser through this step and often the buyer some money.
3. Title Search (Buyer)
The buyer typically pays for a title search as part of the closing costs, but this is a reasonably negotiable fee, and sometimes the documents state the seller will pay it. The results from that search are in the closing documents. A title search proves to the buyer that the property is free of liens and other encumbrances that would otherwise taint the sale. A clean title ensures nobody can claim the property in the future.
The fee for this search varies, but it's usually between $300 and $600.
4. Title Insurance Closing Costs (Buyer and Seller)
Title insurance defends the buyer in the case of a claim against the property in the future. Two policies must be active - one for the lender (if the buyer has one) and one for the buyer. Most of the time, title insurance is pretty cheap, and the buyer will pay for the lender's title insurance while the seller will pay for their insurance.
5. Transfer Tax/Deed Stamps (Seller)
South Carolina has a real estate transfer tax of $1.85 per $500 of the sales price. The seller typically pays this fee when transferring the property from the seller's name to the buyer.
For example, if the property's sales price is $500,000, this fee will be $1.85 * 1,000 = $1,850. The closing attorney will pay this fee directly to the County Register of Deeds.
6. Mortgage Origination Fees (Buyer)
Sometimes, mortgages will have origination fees. These fees cover the cost of the lender to do all the underwriting, document verification, and disbursement of the funds. These fees vary from lender to lender but typically range from 0.5% to 1% of the total loan amount. Buyers can reduce these fees by putting more money down and eliminating them by paying for a home in cash.
7. Attorney Fees (Buyer and Seller)
Unlike some states, South Carolina mandates that buyers use a licensed attorney to handle and review all the paperwork. This attorney is optional for sellers but highly recommended to ensure all deal terms look good.
Fees for real estate attorneys typically range from $500 to $1,500. The buyer pays all costs associated with their attorney; likewise, if the seller chooses to retain one, the seller pays all the expenses related to theirs.
Closing Costs: Real Estate Agent Commissions
Sellers must also pay real estate agent commissions for both the buyer and seller's agents. Usually, real estate agents charge 2.5%-3% of the home's value for their services, so the seller is looking at about 5%-6% of the sales price in agent fees.
While some sellers try to sell their homes independently to minimize these costs, a good agent is worth much more than the 3% commission. A top-quality agent helps sellers get the most money for their listings and ensures they don't accidentally do something that could result in significant headaches later.
Other Fees Are Possible
Buyers often elect to take out a home warranty, which typically goes into the closing costs. Buyers also need an annual insurance policy, which reflects in the closing costs (although it's not a one-time cost to close the deal, but rather a yearly policy that homeowners must pay).
Likewise, sellers sometimes have to make concessions as part of the home inspection findings. For example, a seller might agree to take $10,000 off the sales price after an inspector finds a major repair that will cost the buyer plenty of money to fix. This concession isn't a fee, per se, but it's not uncommon for sellers to make these concessions to coax a deal through.
Take Into Account the Closing Costs
On average, sellers will pay about 7% of their home's value, including real estate agent fees, in closing costs. Buyers typically pay between 2% and 5% of the home's value, but those fees depend on whether the buyer is using a lender or purchasing a home in cash. A cash purchase can cost significantly less, as the buyer can waive appraisals and inspections.
At Southern Bell Living, we have extensive experience buying and selling real estate for our clients. Given any property, we have a pretty good idea of the closing costs and how those costs could impact real estate decisions. If you're ready to buy or sell and want to start exploring some options, including what fees you may have to pay, we're here to help!