How Much Are Closing Costs in South Dakota?

Understanding Closing Costs

Closing costs are fees paid by buyers and sellers beyond the property’s purchase price, covering services and legal requirements to finalize a home sale. These costs are processed at the “closing table,” when property ownership officially transfers from the seller to the buyer.

Closing costs encompass fees from lenders, title companies, and governmental bodies. While exact fees vary, they generally fall into categories like loan-related fees, title services, government taxes and recording fees, and prepaid expenses.

Buyer’s Closing Costs in South Dakota

Buyers in South Dakota can expect their closing costs to typically range from 2% to 5% of the home’s purchase price. For example, on a $400,000 home, these costs might be between $8,000 and $20,000. While estimates vary, some suggest an average closer to 1.3% to 1.75% of the home’s value.

A significant portion of buyer closing costs consists of lender-related fees. Loan origination fees, covering mortgage processing, typically range from 0.5% to 1.5% of the loan amount. Buyers also commonly pay for an appraisal (up to $450) and a credit report fee (around $30).

Title-related expenses are also common for buyers. In South Dakota, buyers typically pay for title insurance, which protects against issues with the property’s ownership history. This insurance generally costs between 0.5% and 1% of the home’s sale price.

Recording fees are charged by the county to officially register the transfer of property ownership and mortgage documents. In South Dakota, the statutory recording fee for deeds and other real estate documents is $30 for the first 50 pages, plus $2 for each additional page. Buyers may also be required to prepay several months of property taxes and homeowner’s insurance premiums into an escrow account at closing.

Seller’s Closing Costs in South Dakota

Sellers in South Dakota typically face higher closing costs than buyers, with estimates ranging from 6.25% to 10% of the home’s selling price. However, this range often includes the real estate agent commissions, which represent the largest expense for sellers. When excluding realtor fees, seller closing costs in South Dakota average around 3.25% of the home’s purchase price.

Real estate commissions are a primary cost for sellers, averaging 5.62% of the home’s sale price in South Dakota. This commission is typically split between the listing and buyer’s agents. For a $240,000 home, this could amount to approximately $13,488.

South Dakota imposes a real estate transfer tax, typically paid by the seller. This tax is set at $0.50 for every $500 of the property’s value (0.1% of the sale price). For a median-priced home of $319,894, the transfer tax would be around $320.

Sellers are also generally responsible for providing an owner’s title insurance policy to the buyer, ensuring a clear title. South Dakota sellers also commonly pay for the lender’s title insurance policy, which protects the mortgage lender’s interest. Sellers will also pay prorated property taxes up to the closing date.

Factors Influencing Closing Costs

Several variables can cause closing costs to differ from typical ranges. The most significant factor is the property’s purchase price, as many fees are calculated as a percentage of the sales price or loan amount. Higher-priced homes generally incur higher closing costs.

The type of loan secured by the buyer also impacts costs; for instance, government-backed loans (FHA or VA) may have different fee structures than conventional loans. The specific lender chosen can also affect loan origination fees and other associated charges.

Negotiations between the buyer and seller can lead to adjustments in who pays for certain costs, potentially shifting financial burdens. For example, a seller might agree to contribute to a buyer’s closing costs as part of the sales agreement. The precise location of the property within South Dakota can also influence costs due to variations in local taxes and recording fees.

To prepare for these expenses, buyers receive a Loan Estimate (LE) within three business days of applying for a mortgage. This document provides an estimated breakdown of loan terms and closing costs. At least three business days before closing, buyers receive a Closing Disclosure (CD), which details the final costs.