What are typical buyer closing costs in San Jose? How much extra money will it take, beyond the down payment, get into that new home in Silicon Valley? The cash needed at the closing table varies depending on many factors.
Today we will offer some general information on home buyer‘s closing costs in Silicon Valley. Different jurisdictions and situations may have additional closing fees.
Typical buyer closing costs – rough estimate
Just need a rule of thumb on the costs? The average closing costs percentage is between one half and two percent of the purchase price, but your actual figure could be substantially more or less, depending on many factors. Most of our buyers pay between .5% and 1%.
Recurring versus non-recurring closing costs
Please note that some fees will be recurring (meaning they will be things you’ll pay again, like property taxes or HOA bills) and others non-recurring (which are one-time fees like title insurance). Where you are in the calendar year can impact fees like property taxes due at closing, too.
Some of the main factors that cause the fees due at closing to rise or fall include:
- loans and related required fees are generally a home buyer’s steepest fee after the down payment
- home buyers who buy down the interest rate with points will see their cash needed to close escrow rise significantly
- whether or not you pay for inspections
- what city you’re buying in
- what type of home, or if it’s in an HOA or not
- and many other smaller escrow related fees, such as if you both fund the loan and close on the same day
- any pest work or other repairs that you pay for on the home prior to the completion of the sale (this is uncommon, but I’ve seen it happen)
- when the next property tax bill is due (you won’t pay more or less, but it’s whether that amount is due at closing or a few months later)
There are online tools that can bring clarity to the typical buyer closing costs, but again only roughly. You will find a closing costs calculator for buyer at ORTC.com, the Old Republic Title Company’s site, and then click on the link for the online netsheets. Or use this link for their online netsheets.
Next we’ll go over what these various typical buyer closing costs can run.
In California, some inspectors are licensed, others are not.
Whether you’re preparing to sell a home or are in contract to purchase real estate in Silicon Valley, you likely will be faced with the prospect of hiring professionals to inspect your home. This can run hundreds of dollars, a thousand dollars or more. The potential liability, though, could be much higher than the cost of paying the professionals to inspect your home, so you’ll want to hire very carefully.
So, what must you know when selecting inspectors in the San Jose & Santa Clara County area?
The Different Types of Inspectors
There are those who focus on particular features of the property, examples being termite or pest inspectors, chimney and masonry specialists, foundation & drainage engineers, pool inspectors, heating & air conditioning and more. Generally, these are all licensed by the state of California, and they may be able to perform repairs on the items they find in need of repair. The two go together – licensing to inspect and being allowed to do repairs.
But this is not true for property or home inspectors. There is no license for doing house, condo, or townhouse inspections in California. Is that good or bad? Part of that package is that they can’t do repairs on problems they find. You can see why it’s good to separate finding problems from being paid to fix them. That’s the plus. There is another side, though.
Does the exterior of a townhouse need to be inspected? If you are in the market to purchase a townhome, you may find that often the home and pest inspector are not including the outside areas such as the walls or roof. If you are preparing to sell your unit, you may be asked if you want to include or exclude the outer walls and features, or if you want a roof inspection done.
First, let’s consider why the inspectors may only inspect the interior of the home.
The reasoning frequently seems to be that the HOA will take care of whatever is on the outer walls or roof, so why bother? That assumption may or may not be accurate.
- If the townhouse is held in condo ownership (as opposed to a PUD, in which homeowners own the outside walls, roof and the land under the unit), the HOA likely will take care of exterior damage.
- If the townhome is a Planned Unit Development, or PUD, it’s much like a single family home: the homeowner will be responsible for repairs. (HOAs will repaint and reroof all units at the same time for both PUDs and condos, but not fix damaged siding, decks, roofs. It’s imperative to know which one you are buying, and you’ll only know that from the preliminary title report. It’s also imperative to know what the HOA will do regarding repairs, and for that you’ll need to look through the lengthy HOA documents.)
Another consideration is the price of the inspection, which will be less – in most cases – if only the interior of the home is covered by the inspector.
Does the exterior of a townhouse need to be inspected even if it’s a condo?
Did you do the repairs outlined when you bought your home?
Recently I showed a home where the owners had been there 7 or 8 years but never did any of the suggested repairs from their pre-sale inspections when they purchased the home “As Is“. The As Is part means that no repairs were provided by the sellers, with the idea that buyers would do whatever was needed later. Desperate to get in when prices were appreciating fast, it seemed that most home buyers said “we’ll take care of it after we own it“.
But many of them forgot.
Today, with the whitest hot market I’ve ever seen in my career, most sellers fix the major items because they understand that it will net them a higher sale price. They fix the foundation, electrical, plumbing, waste lines, roof leaks, pest items, safety issues, and do whatever other repairs would make a buyer pause.
Some, though, don’t do any repairs at all – none! Often they are the same sellers who won’t stage their homes, or for whom scheduling a showing is a big effort, and maybe the disclosures aren’t so thoughtfully done. (In recent weeks I saw a disclosure package in which the sellers wrote on every page, “AS IS SALE” and refused to answer each question.) It’s a giant red flag that these may be difficult sellers.
If you want to maximize your profits, don’t let that seller be you. As Is certainly is the norm, but it’s As Disclosed. Wouldn’t buyers pay more if they weren’t worried about needing to do a lot of expensive and time consuming repairs? You bet. Confident buyers pay more. Let that be your mantra, home sellers.
Pull out your old file, find your inspection reports and review them, especially if you are preparing to sell your home
A few years back I attended a property inspection in San Jose and we found an unwanted resident in the garage: a black widow spider. Needless to say, did not stick around after she was found!
In case you haven’t seen one, I thought I’d share the pic here (click to see more below). Sadly she wasn’t my last encounter with these spooky locals. In fact, I’ve been seeing all too much of them over the last three years! At least this time, we always found her outside.
“Red flags” are clues that something is wrong or potentially wrong. They’re the hints that we need to investigate something further, the sign that we should be on alert.
Some parts of San Jose, and Silicon Valley generally, enjoy beautiful older homes with classic styling and beautiful finishing work. These properties and neighborhoods are prized because they are not cookie cutter, not ranch, not too new. They may be Victorian, Craftsman, Spanish, or any number of other interesting architectural styles.
One area of Santa Clara County that is well known for both charming historic homes and unfortunately also some structural issues among those older houses is the Willow Glen district of San Jose.
Back in 2015 I showed some clients about a half dozen homes, all in Willow Glen, and we saw a lot of “red flags” which hinted of foundation problems, among others. I thought I’d share a few pics I snapped at one of them with my old treo camera here. All of these were taken on the front porch of this house – all visible structural “red flags” before we ever set foot into the house.
Recently a friend asked me about the way in which vendors are selected when people buy and sell homes. In some cases, Silicon Valley home buyers or home sellers know which title company, home inspector, home warranty provider or other vendor to hire. Most of the time, though, they don’t. They are hoping that we real estate professionals can put them into contact with good providers to ease the task of choosing vendors.
When working with my clients, for most vendors I provide a trusted list of sorts. For the various inspections (roof, chimney, home, pest, etc.) or other service (lender, home warranty, title company) there might be as few as two or as many as six resources listed. Most often, my clients ask me if I have one or more which I prefer, and most of the time it is one company for each category (I have a favorite termite company, favorite home warranty company, etc.).
The home buyer or seller in Santa Clara can pick or hire anyone or any company he or she pleases for these various jobs. We agents can and will assist with sharing the names and numbers of those whom we know, like and trust, but at the end of the day, it’s the client who chooses. So really it’s up to the client – he or she can do some research or not. But if they tell me (as they most often do) to go with my preferred vendor, there’s one in each category and I don’t tend to “spread the business around”. Over the years, agents tend to build relationships with people in these companies and get a sense of whom they can trust and want to work with. (We agents would hate it if a client with six homes to sell picked six different Realtors to rotate through, too. We tend to want and also to give loyalty.)
Silicon Valley home buyers, sellers, and their real estate agents rely heavily on the professional advice, insights and opinions of home inspectors, whether it’s for the property generally (house, townhouse or condominium inspection) or for some other component, such as the roof, foundation, chimney, pool, heater, etc. One of the most frustrating – and sometimes maddening – experiences for everyone involved happens when inspectors disagree and their inspection reports provide conflicting advice.
Either extreme is bad, either “calling” something when it’s fine or missing something if it’s not. Often resolution is accomplished by having yet another inspector come out OR by having the two who disagree meet at the property to sort it out.
Here are some real examples I’ve experienced first hand over the years while selling residential real estate in Santa Clara County:
- Over-called: General property inspector called for “further inspection” of heater, roof, or chimney because he said something’s wrong. Further inspection ordered by buyer or seller, and paid for by consumer – but the professional for that aspect of the home says it was just fine. Is it fine or not? The home buyer or seller is out some money and one of the two reports says there’s a problem with it but the other says it’s OK. (This happened a few times where the general inspector “called” things that experts said were in good working order. For that reason, I had to stop recommending him to my clients and began working with another inspector who wasn’t so over-eager that he called things which were not bad. When inspectors disagree with one particular inspector often, it’s time to find someone else.)
- Crawl space nightmare: many homes have crawl spaces and if yours does, it’s important to either go down there yourself or have someone else do it for you periodically to check conditions there. My buyers were purchasing a home near Carlton Elementary in Cambrian (Los Gatos border) and the pre-sale pest or termite inspection (the only one available) was from a company with the absolute worst reputation in the valley, and that report said that there was not one thing wrong in a 50 year old house (highly unlikely!). We ordered new inspections, both home & pest. Both my inspectors found a lot of damage in the crawl space, amounting to about $10,000 in damage not reported by first inspector. The seller’s inspector had claimed to go into the crawl but it was evident that either he didn’t go or he didn’t do it thoroughly. The seller wanted his inspector’s company to do the repairs but we negotiated for a more reputable provider and got it.
- My pre-sale chimney inspection, from a reputable inspector, said my listing’s fireplace and chimney were fine (Los Gatos border area, Alta Vista neighborhood). We got the home sold and the buyers ordered a new chimney inspection, and that mason said it was broken. My first inspector apologized for his error (after coming back out and looking at it again, verifying that it was, in fact, in need of fixing) and said he would do the repair at a reduced rate, but he couldn’t get to it prior to close of escrow. We could not use him because this had to be done prior to close of escrow. Since I had referred this man, I felt partly responsible for his error and offered to split the cost of the expensive chimney rebuilding with my clients. My sellers felt that was fair. I never, ever hired that chimney guy again.
- Another house, another chimney: my pre-sale general inspection cleared the chimney in this lovely Cambrian Park home. Buyers ordered a chimney inspection to be sure and a young kid (maybe 18 years old?) came out and said the chimney was broken and needed repairing. My sellers paid for another chimney inspection, and a seasoned mason looked at it and said it was fine. The other agent and I arranged to have our seasoned mason and the boss of the young kid come out and both inspect it with everyone present. They did and said it was, in fact, fine. The young kid was there and I asked him why he “called” it. He responded, “I wasn’t sure so thought it was safer to have it rebuilt”. (At a cost of about $2000 as I recall!) My sellers were out about $100 for their inspection but did not have to rebuild the chimney. Sometimes, when inspectors disagree, it’s because one of them may be inexperienced.
If you live in Santa Clara County, once known as The Valley of Hearts Delight, you no doubt appreciate our mild, sub-tropical climate. Unfortunately, so do the termites. With that in mind, the question often arises about how often to get a termite inspection.
Types of termites in Silicon Valley and nearby
We have two main types of termites here (and other wood-destroying pests too), drywood termites and subterranean termites.
The subterranean termites, or subs as they are called, can be identified by the mud tubes they build from the ground or floor up the side of a wall. As their name implies, they live underground, and build the tubes as they go. Pest Control operators will remove the tubes and treat the area, injecting chemicals underground at spaced intervals, to exterminate them. See my post on identifying subs here.
Drywood termites, or drywoods, may live anywhere in the the home where there’s wood to eat. If they are found only in one or two areas, a licensed pest control company may do a local treatment. The difficulty with local treatments is that drywood termites may also be lurking in places that cannot be seen, such as between the walls. For that reason, the standard recommendation is to fumigate (also called to tent or to fume) the structure.
If you live in the Santa Cruz Mountains, or close to them, you may also have dampwood termites to contend with. I have seen them in Los Gatos, Cambrian, and Almaden.
A few yaars back, my husband and I went to the Monterey Peninsula for a couple of days to celebrate our 25th wedding anniversary. We had a wonderful time there, but would not return to the hotel where we stayed this time. The worst issue was the mold in the bedroom along the wall and baseboard. I brought it to the hotel’s attention and it was “cleaned”, but I think the issue is far from solved.
Mold is often called mildew, and is seen perhaps most often in bathrooms around the shower, tub, or window. Below is an image of mold (tested, verified) in a garage on an outside wall.
First, I should state that mold is naturally occurring and it is not possible to completely eliminate mold spores from your home. The question is whether or not the mold inside the house is the same kind and density as the mold outdoors, or whether something unusual is harbored indoors.
Mildew and mold need moisture and the right, mild temperatures to thrive – eliminate the source of water and the mold will go dormant. Please note that it will not die when the moisture is eliminated – it just goes into a sleepy state. If water is later reintroduced, the mold spores will spring back to life.
In my experience, the most common place to find mold in the San Jose area tends to be in bathrooms, particularly around older aluminum windows (which tend to be very cold and collect condensation). Mold on these window frames is easily cleaned by using a solution of water and bleach, and it can be prevented by better ventilation and heat, which allows the window frames to dry out. Likewise it’s very easy for mold to grow in showers and tub areas due to the high amount of water present. That water needs to be able to evaporate, otherwise you’re inviting mold to take hold.
Find mold on sheetrock, wood or carpeting? First you must discover the source of the moisture. Most likely, there’s a leak somewhere, either a plumbing leak or around a door, window, roof or flashing.