Discover the Good News About Closing Costs in Las Vegas
Closing costs in Las Vegas (and everywhere else, too) are an inevitable but often overlooked part of any real estate transaction. These costs must be factored in on top of the down payment and other obvious upfront costs.
The good news is that they aren’t necessarily set in stone. Closing costs can vary depending on the location, companies used, and selling price of the property. And some aspects of these costs are open to negotiation.
So whether you’re a buyer or seller, it will behoove you to know a little about Las Vegas closing costs.
Overview of Closing Costs
“Closing costs are the expenses, over and above the property’s price, that buyers and sellers usually incur to complete a real estate transaction. . . . Homebuyers typically pay between 2% to 5% of the purchase price, but closing costs may be paid by either the seller or the buyer.”
Typically, these costs include such things as “loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges. And, usually, there are some prepaid costs for those expenses that “recur over time, such as property taxes and homeowners’ insurance.”
It is only at the final stage of the transaction – when money changes hands, dotted lines are signed, and the title is transferred from seller to buyer – that closing costs actually kick in. The two primary determining factors for these costs are location and the property’s assigned value.
Still, you don’t have to wait till the last minute when the transaction is being finalized to know exactly what these costs will be. For “[t]he lender is required by law to state these costs in a ‘good faith estimate’ within three days of a home loan application.”
Now that we’ve got that out of the way, let’s move on to an in-depth examination of closing costs in Las Vegas.
Nevada Closing Costs
First, though, we’ll consider these costs in Nevada as a whole to get a better handle on what they’ll be for Las Vegas.
Besides the mortgage-related costs borne by the buyer, the typical major components of closing costs in Nevada are the costs for . . .
- Home Inspection
- Property Survey
- Escrow Fees
- Property Tax
- Homeowners Insurance
- Mortgage Insurance
- Agent commission
With the average home selling for between $300,000 and $400,000, Nevada closing costs typically run in the range of $4,160 to $7,395.
The average total for closing costs, then, is $5,546. And on average in Nevada, these costs are 1.39% to 1.85% of a home’s sale price.
Las Vegas Closing Costs
There are, of course, those costs the buyer must pay her mortgage lender for originating and processing the mortgage. But we want to take a look at all the other costs for closing a real estate transaction in Las Vegas.
The ones of primary concern are . . .
Real Estate Agent Commission
The most often quoted figure for agent commissions is about 6% of the sale price. This fee for service rendered is typically paid by the seller and is then split between the seller’s agent and the buyer’s agent.
But keep in mind that this fee is always negotiable. It could, in fact, be as low as 1% for a discount broker. (More on this in a bit.)
The cost for recording a new deed, usually split between buyer and seller – $75
Paid to the escrow company (or attorney or title company) for service rendered, primarily holding the earnest money and overseeing the closing – around $275
A one-time fee charged by the lender for arranging tax payments – $100
Also including title search to ensure that the seller actually owns the property and can in fact sell it – that is, has a clear title – $500 to $600
State Transfer Tax
A state-specific tax paid by the seller for transference of title – in Nevada, $5.10 per $1,000 of loan value
A fee paid by the seller in order to clear the title of any liens or other encumbrances (if applicable) – $156
An optional fee paid by the seller (if applicable) for a one-year warranty on the home – basic plan in Nevada averaging $400
Form 1099 Charge
A form required by the IRS as a means to report sale of a property – $50
An inspection to determine the presence of damaging pests such as termites (may be requested or required and may be included in inspection costs – ranges from $50 to $225
Charged to cover the costs of transporting necessary documents (of which there are many) between concerned parties – $50 to $250
And there may be other fees. So, as you can see, just these of the Las Vegas closing costs can add up to a mighty hefty chunk of cash.
But it’s not really as bad as it seems on the face of it.
Some Good News
The first bit of good news is that closing costs have been trending downward in Las Vegas and are now more transparent.
“The average closing costs . . . in Nevada dropped to $3,414 [in 2012], seventh-lowest in the nation and down 20 percent from a year ago . . . Last year, Nevada had the 15th-highest closing cost of $4,244.”
In addition, this marked the third year in a row when lenders were “required to estimate third-party fees within 10 percent of the final cost.”
This is an important shift because previously “people would go to closing and be surprised – unpleasantly surprised – that the costs were significantly higher than the good-faith estimate . . . HUD (Housing and Urban Development) actually has the authority to make this change, so they made a requirement that the final cost could not exceed 10 percent of the good-faith estimate.”
And there’s yet more good news . . .
Closing costs can be negotiated. “It’s not just the ‘Services You Can Shop For’ section of the Loan Estimate; you can substantially whittle down the charges you pay by asking questions — and most importantly, by comparing fees and service charges from more than one lender.”
So you can, especially if you’re a buyer, potentially reduce these costs quite a bit by:
- Knowing where the savings are
- Comparing lenders’ Loan Estimate forms
- Pushing back on lender fees
- Shopping for title and settlement services
- Asking the seller to contribute
- Considering a ‘no-closing costs’ mortgage
- Signing loan papers near the end of the month
- Asking your bank about discounts and rebates
Why You Need a Good Local Las Vegas Agent
Las Vegas closing costs can indeed add up to a lot of money, but, as we’ve just shown, there are several strategies to whittle down those costs. It takes, though, a good bit of industry knowledge, plenty of experience in local markets, and honed skills.
And that’s precisely why you need an experienced Las Vegas real estate agent in your corner.
Really, you shouldn’t pay more than you have to by trying to go it alone.