Closing costs on a real estate transaction can take many forms and can vary widely. Lender fees, title company closing costs, and transfer fees are just a few of the ingredients that can push up closing costs.
Bankrate.com’s 2012 annual survey of closing costs shows that Colorado has the third lowest closing costs, on average, of any of the 50 states. The Bankrate survey showed average closing costs of $3,199 for Colorado, leaving only Missouri ($3,006) and Kansas ($3,193) with lower average closing costs.
Different states use different processes and procedures for settling real estate transactions.
New York is a state where buyers and sellers usually hire attorneys to prepare closing documents and attend closing. That, obviously, is why New York ranks #1 on the list of most expensive states.
California and Nevada are “escrow states”, where buyers and sellers hire a third party entity called an escrow company to prepare documents, ensure adherence to contract terms and receive and disburse settlement funds.
In Colorado, we are a “title state”, meaning that title companies (which also issue the title insurance policy for the transaction) officiate the closing process, which is highly streamlined compared to other states.
Because closing costs are often prorated to the sales price and/or loan amount, states with higher real estate prices tend to have higher closing costs.
The bottom line is that, even though it may seem like buying or selling a home in Colorado is expensive, we are the third cheapest state in the country for closing costs.
Which means more of your money stays in your pocket.