A San Diego Buyer’s Guide to Closing Costs: What They Are & Who Pays

Purchasing or selling a home in San Diego isn’t just about location and listing price. The deal’s closing costs can also influence your overall budget or profit. From escrow fees to title insurance, these expenses can add up quickly. So, who pays them, and how can you prepare? Below, we’ll outline the most common closing costs in San Diego and offer tips on handling them effectively.

1. Defining Closing Costs in San Diego

• Overview: Closing costs encompass all the fees required to finalize a real estate transaction, including lender fees, title work, homeowner’s insurance, and more.
• Typical Range: In California, closing costs for buyers can hover between 2%–5% of the purchase price. With San Diego’s higher home values, this can be a significant sum.
• Local Market Influences: Certain fees, like Mello-Roos taxes or higher insurance costs in coastal zones, can affect overall closing costs in specific neighborhoods.

2. Common Closing Costs for San Diego Transactions

• Loan Origination & Underwriting: If you’re financing the property, lenders charge fees to process your loan, underwrite it, and lock in the interest rate.
• Appraisal & Inspection: Buyers typically pay for these to confirm the property’s value and condition—vital in competitive San Diego neighborhoods.
• Escrow & Title Fees: Escrow companies handle the transaction details, while title insurance protects against ownership disputes. Who pays these fees can vary by tradition or negotiation.
• Prepaid Items & Reserves: Property taxes, homeowner’s insurance, and mortgage interest might be pre-funded at closing.

3. Who Usually Pays What in San Diego?

• Buyer’s Side: Loan-related fees (e.g., origination, underwriting), appraisal, inspection, and usually the lender’s title policy. Buyers also pay their share of escrow fees.
• Seller’s Side: Sellers often cover real estate agent commissions, transfer taxes, and might pay for the owner’s title policy. If repairs or concessions are negotiated, that adds to seller costs.
• Negotiation Nuances: In a hot market—like coastal areas (e.g., La Jolla, Pacific Beach)—buyers might offer to shoulder more closing costs to entice the seller. Conversely, in cooler areas or markets, sellers might sweeten the deal by covering some buyer expenses.

4. Reducing or Negotiating Closing Costs

• Request Seller Credits: If the home inspection reveals minor issues, you might request a closing cost credit instead of repairs. However, in highly competitive markets, this could weaken your offer.
• Shop Lenders: Compare at least 2–3 lenders. Some have lower origination or underwriting fees, saving you potentially thousands.
• No-Closing-Cost Options: You can roll fees into a slightly higher interest rate, paying less upfront but more over time. Decide which route aligns better with your long-term goals.

5. Be Prepared & Plan Ahead

• Loan Estimates & Closing Disclosures: Lenders must provide a Loan Estimate early in the application process and a Closing Disclosure at least 3 days before closing, detailing your final costs.
• Wire Funds Securely: San Diego’s busy real estate scene means wiring instructions can be a target for fraud. Always confirm details directly with the escrow company.
• Budget Wisely: Don’t forget moving expenses, potential renovations, and an emergency fund after you settle your closing costs.

Conclusion
From escrow fees to title insurance and beyond, closing costs are a key element of San Diego real estate transactions, shared by buyers and sellers in various ways. Understanding these fees—and knowing how to negotiate or reduce them—can protect your budget and make the entire process smoother.

Curious about San Diego closing costs or preparing to buy/sell a home? Contact us for a personalized breakdown of fees and strategies to keep more money in your pocket at closing