Closing costs, the costs associated with buying or selling a home, can add up. It’s wise to get an estimate of how much you’re likely to pay in closing costs before you make an offer to buy a home or accept an offer to sell.

Closing costs reduce the amount the seller nets from the sale. Buyers need to know in advance of entering into a home-purchase contract that they have enough cash to cover both the downpayment and closing costs.

Closing costs vary with location. Often who pays what fees — buyer or seller — is dictated by local custom. For instance, in Northern California, buyers usually pay the title insurance premium, while sellers usually pay the premium in Southern California.

HOUSE HUNTING TIP: Some real estate agents use 1 percent of the expected selling price to estimate a seller’s closing cost. This might be close to accurate in some cases. But, there are so many variables that can affect the closing costs in any given sale transaction that it’s preferable to have your real estate agent give you an itemized list of the costs you are likely to pay.

Sellers’ closing costs can include such things as the real estate broker’s fee; transfer taxes, if there are any; costs associated with any mandated compliance requirements; title insurance, in some places; attorney fees, in some cases; closing or escrow agent fees; inspection fees, unless they were paid directly to the inspectors; a home warranty, if applicable; fees for drawing, notarizing, and couriering documents; recording fees; property taxes (if seller has overpaid, the buyer will credit the seller that amount); and homeowner association dues, if there are any.

In addition to the closing costs listed above, the sellers pay off the liens secured against the property and any outstanding interest owed at closing. When you make a mortgage payment, it pays interest owed for the previous month. So, if you were to close on March 1, you would owe the lender interest from Feb. 1 through the date the lender receives the funds, which may not be until a day or so after you close.

With short sales, where the sale price is insufficient to pay off the liens and closing costs, additional closing costs may apply, such as a short-sale process fee charged by the escrow or closing agent. If a third-party short-sale negotiation company is involved, there could be a fee as high as 1 percent of the sale price charged at closing.

Sellers who live in an area where a property survey is required and who customarily pay the cost might have significantly higher closing costs than would a seller in Oakland, Calif., for example, where there aren’t any expensive point-of-sale compliance requirements.

Buyers’ closing costs customarily cover such things as the fees associated with the buyers’ new mortgage; transfer taxes, if there are any; title insurance, depending on the area; homeowner insurance premium for the first year (usually required by the lender); buyer’s broker fee, if appropriate; attorney fees, in some cases; escrow or closing agent fees; miscellaneous fees for document preparation and notarizing signatures; and proration of property taxes and homeowner association dues, if there are any.

Buyers’ closing costs can differ significantly depending on how many points their lender charges. “Points” is a term used for the loan origination fee; one point equals 1 percent of the loan amount. On a $600,000 mortgage, one point would add $6,000 to your closing costs. It would add only $1,500 if you paid 1/4 point, but your interest rate on the loan would likely be higher.

THE CLOSING: Even though local custom usually prevails, who pays a particular closing cost is negotiable.

Dian Hymer, author; reprinted from Client Direct

On Tuesday, July 27, 2010, the Fremont City Council approved new rules for second-story additions. The rules ban these additions in the Glenmoor neighborhood but allow additions up to 27 feet in Mission Ranch. These are the only neighborhoods subject to the standards. Additions are still allowed in all other areas of the City of Fremont.

These new regulations were created in response to complaints by some property owners in the Mission Ranch neighborhood about the impact that “Monster Home” remodeling projects were having on privacy and views.They seek to strike a compromise between preserving neighborhood character and protecting private property rights.

Fremont had considered a total ban on second story additions but relented following public outcry. Instead, 18 months ago they placed a moratorium on additions while City staff studied the issue and developed the new standards. Bay East members and staff testified at Planning Commission and City Council meetings that property owners needed greater certainty in regards to what they can and can’t do with their homes.

Property owners in the Mission Ranch neighborhoods will be able to add a second story to their homes as long as the addition meets certain criteria. Glenmoor owners are allowed to expand their homes but not add a second story.

Reprinted with permission of Bay East Association of Realtors from the Bay East Government Affairs Weekly Report.