Escrow Fees: Who Pays What in a California Real Estate Transaction?
When you’re buying or selling a home, the price tag isn’t the only financial figure that matters. Closing costs—including escrow fees—can add thousands of dollars to the total cost of your transaction. But who actually pays these fees? Is it the buyer? The seller? Both?
At Neighborhood Escrow, we understand how confusing escrow costs can be—especially for first-time buyers and sellers. While the escrow process is designed to ensure a fair and secure transaction, the details of who pays what can vary based on local customs, negotiations, and the specifics of the deal.
Here’s what you need to know.
What Are Escrow Fees?
Escrow fees are the charges associated with the neutral third party—your escrow company—that handles the transfer of funds and documents during a real estate transaction. This includes:
- Holding deposits in trust
- Disbursing funds at closing
- Managing and preparing necessary paperwork
- Coordinating title, insurance, inspections, and lender requirements
- Ensuring both parties meet their contractual obligations
These services come with fees, which are typically charged as a flat fee or as a percentage of the property’s sale price.
Typical Cost of Escrow Services
While fees vary by location and complexity of the transaction, escrow fees in California generally range from $1,000 to $2,500, or 0.2% to 0.5% of the purchase price. Some companies charge additional fees for notary services, wire transfers, or document preparation.
Neighborhood Escrow provides transparent estimates upfront so there are no surprises at the closing table.
Who Pays the Escrow Fees?
Now to the heart of the question: who pays for escrow?
The short answer is: it depends—but typically, the buyer and seller split the escrow company’s fee 50/50. However, there’s no hard-and-fast rule. The way escrow fees are divided often depends on:
1. Local Customs
Real estate practices can vary significantly by region—even within the same state. In Southern California, it’s common for buyers and sellers to split escrow fees. In Northern California, one party may traditionally cover more of the cost.
That said, these are just customs, not laws. Parties are free to negotiate differently.
2. Negotiated Terms
Like almost everything in a real estate contract, who pays what can be negotiated. A motivated seller might offer to cover all escrow fees to sweeten the deal. In a competitive market, buyers might agree to cover more costs to make their offer more appealing.
3. Involvement of a Lender
In some cases, lenders may cover specific escrow-related fees—especially if you’re using a closing cost assistance program or if the lender has included certain services in their loan package.
Other Closing Costs to Consider
While escrow fees are one part of the equation, they’re not the only closing costs involved in a transaction. These may include:
- Title insurance
- Document transfer taxes
- Grant deed recording fees
- Home inspection costs
- Notary fees
- Courier and wire transfer fees
Some of these are customarily paid by the buyer, others by the seller—but again, this can vary.
Why It Matters
Understanding who pays escrow fees isn’t just about fairness—it can help you:
- Plan your closing costs more accurately
- Negotiate better terms in your offer or counteroffer
- Avoid last-minute surprises during escrow
- Keep the transaction on track for a smooth close
Work with a Transparent Escrow Partner
At Neighborhood Escrow, we believe clarity is key. We’ll walk you through every fee, explain who’s responsible for what, and make sure your transaction stays on time and on budget.
Have questions about escrow fees or closing costs? Call 310-378-2456 today to speak with a knowledgeable escrow officer. At Neighborhood Escrow, we’re here to make sure your transaction is not only secure—but also completely transparent.
