So, you’ve found the perfect place in Santa Monica. The location’s unbeatable, the lifestyle fits, and everything feels like it’s falling into place. But just as you’re getting ready to make it official, the final numbers come in… and they’re higher than you expected. That’s the moment many buyers realize closing costs aren’t just a line item. They’re a critical part of the deal.
If you’re serious about purchasing in this market, understanding closing costs is part of buying smart.
What Are Closing Costs?
Closing costs are the collection of fees and expenses paid at the end of a real estate transaction, separate from your down payment. These costs cover everything from loan processing and title services to local taxes and insurance.
In Santa Monica, where real estate values are above the national average, these costs can be higher in dollar amount than in many other areas. That’s why understanding how they work (and how they’re calculated) is especially important for buyers entering this coastal market.
In Santa Monica, where real estate values are above the national average, these costs can be higher in dollar amount than in many other areas. That’s why understanding how they work (and how they’re calculated) is especially important for buyers entering this coastal market.
Typical Closing Costs for Buyers in Santa Monica
While closing costs vary depending on the home's price, the type of loan, and individual transaction terms, a good rule of thumb is to budget between 2% and 5% of the purchase price for closing costs.
Here’s a breakdown of what that usually includes:
Here’s a breakdown of what that usually includes:
1. Loan-Related Fees
If you're financing your purchase, you’ll see several costs tied to your mortgage:
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Loan origination fee: Usually 0.5% to 1% of the loan amount
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Credit report fee: Often under $100
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Appraisal fee: Typically between $500 and $750 in Santa Monica due to higher property values
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Underwriting and processing fees from your lender
These fees are often bundled into a lender’s closing disclosure, but it’s important to ask for a detailed breakdown early in the process.
2. Title and Escrow Fees
Escrow and title services are essential for managing the transaction and ensuring clear ownership:
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Escrow fee: Often split between buyer and seller in Santa Monica, and typically a few thousand dollars based on purchase price
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Title insurance (lender’s and optionally buyer’s): Protects against issues with the property's title
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Notary and recording fees: Standard fees to finalize the legal documents
Santa Monica buyers commonly use trusted local escrow companies to help streamline the process.
3. Property Taxes and Prepaid Items
Buyers are typically required to prepay a portion of property taxes, interest, and homeowners insurance:
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Property tax prorations: Based on Santa Monica’s tax rate (generally around 1.1% of assessed value, plus local assessments)
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Prepaid mortgage interest: Covers the interest from closing to the end of the month
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Insurance premiums: Usually, the first year of homeowners insurance is paid upfront
These prepaid items are non-negotiable and necessary to complete your purchase and fund your mortgage.
4. Inspection and Miscellaneous Fees
Although not always classified as “closing costs,” these upfront services are paid during escrow:
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Home inspection: Generally $400–$700, depending on the size and complexity of the home
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Termite inspection and clearance (if required by lender or contract)
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HOA transfer fees or document prep if buying in a condo or gated community
While these costs are smaller individually, they add up quickly and should be included in your total cost estimate.
Who Pays What? Santa Monica-Specific Norms
In California, certain closing costs are traditionally split between the buyer and seller, but this is not set in stone. In Santa Monica, buyers typically cover:
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Title insurance for the lender
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Escrow fees (split with the seller)
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Notary, recording, and transfer fees
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Loan-related fees and inspections
Sellers usually pay:
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Title insurance for the buyer
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Real estate commissions
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City transfer tax (Santa Monica’s is currently $3.00 per $1,000 of sale price for homes under $5 million)
However, every deal is negotiable, and with the right agent advocating for you, it’s possible to request seller credits or cost-sharing depending on market conditions.
How Closing Costs Impact Your Overall Budget
When buying in a high-demand market like Santa Monica, it’s easy to focus solely on securing the home and forget about the expenses tied to closing. But closing costs in Santa Monica can easily reach tens of thousands of dollars, especially on properties over $1 million.
That’s why it’s crucial to:
That’s why it’s crucial to:
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Get a Loan Estimate from your lender early in the process
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Ask your real estate agent for a net sheet that estimates total closing costs
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Avoid depleting your cash reserves on just the down payment
Budgeting properly ensures a smoother escrow process and prevents financing issues that could delay or derail the deal.
Can Closing Costs Be Rolled Into the Mortgage?
In some cases, yes, especially for buyers with strong credit and a flexible lender. Some closing costs can be:
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Rolled into your loan balance (increasing your monthly payment slightly)
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Offset by a lender credit in exchange for a higher interest rate
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Covered by the seller as part of a negotiated credit
However, not all fees are eligible for deferral or credits. For example, inspections and appraisals are usually paid out-of-pocket before closing.
Tips for Managing Closing Costs in Santa Monica
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Work with a local lender. They’ll be familiar with Santa Monica’s market and closing norms, and can give you more accurate cost estimates.
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Compare estimates. Shop around for title and escrow services; you have the right to choose providers.
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Negotiate with the seller. In slower markets or with motivated sellers, you may be able to secure credits toward your closing costs.
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Ask your agent early. Your real estate agent should help you factor closing costs into your buying strategy from day one.
Ready to Buy in Santa Monica? Plan for Closing Costs With Confidence
Whether you're a first-time buyer or moving up to your next home, understanding closing costs is an essential part of preparing for a successful purchase. Megan Whalen brings years of experience navigating local transactions and helping buyers feel confident every step of the way. Reach out today to get expert insight into your buying budget and a clear roadmap to the closing table.
