Wednesday, November 10, 2010

What Are Closing Costs?

First time home buyers often ask about closing costs, and it can be very confusing, especially when they have limited funds to bring into escrow for closing, or when they are shopping multiple loan products with different costs structures. It’s important for all home buyers to remember that there are 3 different types of closing costs.

Title and escrow fees, and county (or city) transfer taxes comprise the first general category of closing costs, often know simply as escrow fees. These are fees that must be paid to sell a home; and all three items are specifically addressed in the California Real Estate Purchase Agreement. While the responsibility of paying these fees is completely negotiable, in Humboldt County, California these fees are most often split 50/50, with both the buyer and the seller each paying half.

The second general class of closing costs is prorations or prepaids, most often taxes or insurance payments. If a home is sold on Nov. 30, but the seller has paid his taxes through the end of the year, then the buyer must pay the seller back for the December taxes he has already paid; these are paid back on a prorated basis. Similarly, lenders often require that a new home owners insurance policy be paid up a year in advance. This is prepaid at the closing of escrow. In Humboldt County, these are typically thought of as buyers expenses, as they go to service the home during the period after the buyer has taken ownership.

Similarly, the third class of closing costs is the buyers’ loan fees. Each lender will charge a variety of up-front loan costs that range from small administrative fees up to much larger commissions or origination fees to pay the loan officer. These are fees a buyer pays for the privilege of getting a loan; a cash buyer would not pay any of these because he’s not getting a loan. Therefore, in Humboldt County, they are most often seen as a buyers’ expense.

Prorations and loan fees are not specifically addressed in the California Real Estate Purchase agreement, but they, as well as title and escrow fees, can be negotiated in the contract. The buyer can pay them all, or the seller can give a credit to pay them at the close of escrow, or they can be split in any way agreeable to both parties. It is important for a buyer to know what the different closing costs are and how much they will cost so that they can have confidence that they can meet all of the terms of the agreement.

If you’re not sure whether you have enough money saved up to buy your dream home, give me a call at (707) 499-7111, or email me at, and we can discuss options.

Thursday, November 4, 2010

October 2010 Humboldt County Real Estate Market Statistics

What do our October 2010 Humboldt County, California real estate statistics look like?  We seem to have started a downward trend in prices again in Humboldt County, California. The number of active homes on the market, while not a huge number, is creeping up in relationship to previous years. We now have 677 homes active on the market; that’s much closer to 2008 levels than 2009 levels. And more homes on the market will mean downward pressure on prices.

Especially when the number of homes sold is down as well. At 72 homes sold, we’re just a hair below 2008 levels, but well below the 88 homes sold in 2009. While not by much, this is the lowest number of homes sold in the month of October in recent memory. This, too, will put downward pressure on prices.

The average home sales price for the month of October was $256,572; not the lowest of the year, but the lowest for any October in a long time. It also continues the downward trend started from the most recent peak in July.

And the median home sales price in Humboldt County was $236,375, which does represent a new low for the year and for recent history.

It seems that the large number of short sales and bank owned properties, or REO’s, in the market is causing our downward trends. 26% of the homes sold in October were either short sales or bank-owned properties; that’s up from 18% for all of 2009. And not only do short sales and bank-owned properties sell for less, they compete with regular sellers, thereby putting downward pressure on all real estate prices. While the rest of the country has been dealing with this level, and even higher levels, of bank controlled sales, this is a first for Humboldt County. Is there a bright spot in the clouds? Yes: it is a great time to BUY real estate!

What questions do you have about short sales or bank-owned properties? Give me a call at (707) 499-7111, or email me at