How Much Are Closing Costs in Washington?

Buying or selling a home involves numerous financial considerations beyond the agreed-upon purchase price. Among these are closing costs, which represent a collection of fees and expenses incurred at the final stage of a real estate transaction. Understanding these costs is essential for both buyers and sellers, as they can significantly impact the total financial outlay required to complete the transfer of property ownership. Preparing for these expenses from the outset can help ensure a smoother and more predictable experience.

Understanding Closing Costs

Closing costs encompass charges collected by different parties involved in a real estate transaction. These fees cover the services necessary to finalize the sale and transfer the property title from the seller to the buyer. They are distinct from the down payment or the property’s sale price, representing administrative and service charges rather than a portion of the equity or principal.

The purpose of closing costs is to compensate lenders, title companies, government entities, and other professionals for their services. These expenses ensure that all legal and financial requirements are met before ownership transfers. Categories of services covered by these costs include those related to the mortgage loan, property title, and governmental recording processes.

Common Closing Costs for Buyers in Washington

Buyers in Washington encounter a range of closing costs, which fall between 2% and 5% of the home’s purchase price. These costs include fees associated with obtaining a mortgage and legal property transfer. The specific amounts can vary based on the lender, loan type, and the complexity of the transaction.

Lender fees make up a large portion of a buyer’s closing costs. These include loan origination fees, which compensate the lender for processing the loan application, ranging from 0.5% to 1.5% of the total loan amount. Buyers pay for an appraisal, $600 to $900 in Washington, to verify the property’s value. A credit report fee, between $25 and $50, is charged to assess the buyer’s creditworthiness.

Title-related expenses are also incurred by buyers. While the seller covers the owner’s title insurance policy, buyers are responsible for the lender’s title insurance policy. This policy protects the lender against defects in the title. Escrow fees, for a neutral third party holding funds and documents until closing, are split between the buyer and seller.

Additional costs for buyers include prepaid items such as property taxes and homeowners insurance premiums. Lenders require an initial amount for these, several months’ worth of property taxes and the first year’s homeowners insurance premium, paid into escrow at closing. Recording fees, between $100 and $250, are paid to the county to record the deed and mortgage. Home inspection fees, $300 to $500, are also incurred, though not always required by lenders.

Common Closing Costs for Sellers in Washington

Sellers in Washington incur closing costs, which can range from 6% to 10% of the home’s sale price, though this range includes real estate commissions. Excluding real estate commissions, seller closing costs average 3.62% of the home’s purchase price. These expenses are for facilitating the sale and transferring ownership.

Real estate commission is the largest expense for sellers, amounting to 5% to 6% of the home’s sale price. This fee covers the listing agent’s and the buyer’s agent’s commissions. While traditionally paid by the seller, recent changes in real estate practices may impact how these commissions are structured in the future.

A cost unique to Washington sellers is the Real Estate Excise Tax (REET). This is a tax on the sale of real property, with a graduated rate structure. As of January 1, 2025, the state portion of REET ranges from 1.1% for sales up to $525,000, increasing incrementally to 3.0% for sales exceeding $3,025,000. Additionally, local jurisdictions within Washington may impose their own REET, ranging from 0.25% to 0.5%.

Sellers also pay for the owner’s title insurance policy, which protects the buyer from future claims against the property’s title. Escrow fees, for the escrow company, are split with the buyer or negotiated. Other expenses include prorated property taxes and homeowner association dues, with the seller responsible for their share up to the closing date. Any remaining mortgage balance and recording fees to release the lien are also paid at closing.

Factors Affecting Closing Costs in Washington

Several variables can influence the total amount of closing costs in a real estate transaction. The purchase price of the home and the loan amount are major factors, as many fees are calculated as a percentage of these values. A higher home price or loan amount leads to higher overall closing costs.

The specific location within Washington can also affect costs. While the state-level Real Estate Excise Tax (REET) has graduated rates, local REET rates can vary by county and municipality. Recording fees, paid to the county to document the transaction, may also see variations based on local regulations.

The type of loan obtained impacts buyer closing costs. Different loan programs, such as FHA, VA, or conventional loans, have distinct fee structures and requirements. For example, some government-backed loans may have specific upfront mortgage insurance premiums or different appraisal requirements. Furthermore, individual lenders have varying fee schedules for loan origination and underwriting.

Negotiations between the buyer and seller can alter who pays for certain costs, although some fees are statutorily assigned. The property type, such as new construction, existing home, condominium, or single-family residence, can also introduce different fees or inspection requirements. Lastly, the closing date can influence prorated costs, such as property taxes and interest, as these are calculated based on days owned.

Estimating Your Specific Closing Costs

For buyers, the primary tool for estimating closing costs is the Loan Estimate (LE), a standardized three-page document provided by the lender within three business days of a mortgage application. This document details the estimated interest rate, monthly payment, and total closing costs. It allows buyers to compare offers from different lenders.

Later in the process, at least three business days before closing, buyers receive the Closing Disclosure (CD). This five-page form provides the final details about the mortgage loan, including the exact loan terms, projected monthly payments, and the final amount of fees due at closing. The Closing Disclosure should match the initial Loan Estimate, with limited changes. Buyers should review this document to ensure accuracy and understand the final financial obligations.

For sellers, estimates for closing costs are provided by their real estate agent or the escrow company handling the transaction. These professionals can offer a detailed breakdown of expenses, including real estate commissions, the Real Estate Excise Tax (REET), and prorated property taxes. Sellers should obtain this estimate early in the selling process to anticipate their net proceeds.

Both buyers and sellers benefit from consulting with local real estate agents, mortgage lenders, or escrow officers in Washington. These professionals possess knowledge of local practices and regulations, enabling them to provide personalized and accurate estimates based on transaction details. Their expertise helps individuals prepare financially for the closing process.