Where were closing costs highest in 2018?
According to ClosingCorp, which collects and analyzes such data, states with the highest average closing costs for the year, including taxes, included the District of Columbia ($24,613), New York ($13,581), Delaware ($13,309), Washington ($12,667) and Maryland ($11,395).
States with the lowest closing costs, including taxes, included Missouri ($1,887), Indiana ($2,002), South Dakota ($2,149), Iowa ($2,248) and Nebraska ($2,267), the company says in its latest closing costs report.
Excluding taxes, states with the highest average closing costs in 2018 were the District of Columbia ($5,694), New York ($5,586), Hawaii ($5,318), California ($5,284) and Washington ($4,701).
States with the lowest closing costs, excluding taxes, were Missouri ($1,887), Nebraska ($1,919), South Dakota ($1,995), Indiana ($2,002) and Iowa ($2,011).
The national average for a single-family property in 2018 was $5,779, including taxes, and $3,344, excluding taxes.
That up from the last closing costs report released in July 2018, which showed that the average closing costs for a single-family property – during the six months ended March 30, 2018 – totaled $5,651 per transaction, including taxes.
Excluding taxes, the average for the year is down from the average for that same six-month period, at $3,438.
ClosingCorp includes lender’s title, owner’s title, appraisals, settlement fees, recording fees, land surveys and transfer tax in its analysis.
To determine the average single-family home sale ranges, the company uses home price data from CoreLogic to create a $100,000 price range.
ClosingCorp says it uses ranges, rather than average sales prices, because it allows the company to see real transactions.
“The average home price is a number, but not necessarily a real property with a real closing,” explains Dori Daganhardt, senior vice president of data strategy for ClosingCorp, in the report. “To get a sense of what is really going on in the market, we compared real cost data on more than 1.5 million purchase transactions that went through our SmartFees platform in 2018. We also used ‘market-specific’ rates and fees charged by the most active settlement services providers in each geographic area, not just network averages.”
Bob Jennings, CEO of ClosingCorp, further explains that “because closing costs are based on sale price and taxing jurisdictions, the rankings of high and low-cost states tend to be relatively static.”
“However, that doesn’t mean that various jurisdictions aren’t continually contemplating increases and adjustments,” Jennings says. “Our research shows more than one-third of all counties considered an adjustment to their taxes in 2018 and adjustments in more than 200 counties actually went into effect.
“These include some interesting twists,” he adds. “For example, four New York counties let their local mortgage tax expire and then reinstated the same tax; and the city of Baltimore introduced a ‘yield tax,’ which is essentially a ‘tax on tax.’”
Jennings says mortgage lenders can “expect to see even more adjustments in 2019, including a new law which increases the mansion tax on a sliding scale for transfers where the consideration is in excess of $2 million in New York City – already one of the cities with the highest closing costs.”
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