Who Pays for Title Insurance in Arizona?

As the name implies, closing costs are the costs paid during the closing of the sale of a home. Both buyers and sellers are responsible for specific closing costs. These costs may vary by state, so, who pays for title insurance in Arizona? 

Who Pays for Title Insurance in Arizona?

Title insurance is paid by the seller in Arizona. The buyer covers the costs of the loan policy unless the sales contract reflects otherwise. In order to control the fees a seller pays, it is advisable that they choose the title insurance company. 

Realtor calculating title insurance fees in Arizona

Closing Costs for Sellers in Arizona 

Outside of the mortgage payoff and the realtor’s commission, home sellers in Arizona typically see about 0.4% to 2.6% of the home’s sales price go towards closing costs. Closing cost fees for sellers include: 

Mortgage Payoff

This is an essential payment for the purchase to go through. It involves paying off any outstanding balance, as well as prepayment penalties. It typically comprises:

  • Principal balance
  • Recording fee
  • Interest accrued up until the last day of closing from the last payment 
  • Penalties fees that the lender might charge 

Realtor Commissions 

In Arizona, 6% of your home’s sale price usually goes for commissions. 3% to the listing broker and the other 3% to the buyer’s agent. This usually eats well into capital gains especially if your home is highly priced. 

On the other hand, one way to save cost and still enjoy full realtor service is to opt for a flat fee realtor like AZ Flat Fee. You would still enjoy services including:

  • Showing
  • Marketing the house
  • Screening buyers 
  • Negotiations with prospective buyers 
  • Guidance with paperwork 
  • Expert advice through the process 

You would also potentially be saving thousands of dollars. 

Title Service Fees

The cost of title service fees ranges between $550-1,250. It goes to the closing agent, usually the escrow service, title company, or attorney who was in charge of handling the transaction’s logistics. 

In Arizona, buyers and sellers commonly divide title service fees, and it is a portion of closing costs that is negotiable as well. 

Usually, title companies may divide up the fees, so, ensure that your closing agent gives you the quote for the entire service cost — not the fees broken down. 

Title Insurance

Sellers typically pay for the owner’s title insurance policy in Arizona. This insurance covers the buyer in the event that a claim comes against the home title before that has a date prior to the one on their purchase contract.  

Realtor handing out the title insurance copy to home buyer

This usually ranges between 0.4%-0.65% of the home sale price. In actual costs, it is usually around $1,450. However, the actual rates vary based on:

  • Title company used
  • Home sales price 

Homeowners Association (HOA) Fees

If the property you’re selling is under a homeowners association (HOA), the HOA board would typically charge a transfer fee to convey the title to the new lender. This fee is usually paid by the seller. On average, HOA costs range between about $150-$500, but the specific amount may vary from community to community. 

Seller Concessions  

This category of closing costs involves those that the seller agrees to shoulder or split with the buyer as an incentive when closing the deal. 

Some of these concessions may include purchases of a home warranty, paying some of the buyer’s closing costs, as well as even lowering the home’s sale price. 

The majority of sellers make at least a single concession. Concessions to make would require the expert advice of your AZ Flat Fee realtor. However, the actual costs vary on the basis of the dynamics of the transaction, in terms of how much of an upper hand the seller has. 

Closing Costs for Buyers in Arizona 

Closing costs for buyers are flexible and quite negotiable. However, these are the main costs that the buyer typically covers: 

Home Inspection Fees

This depends on the home’s location, size, and amenities. Whether you reside in Mesa, Chandler, Phoenix or Tucson, a home inspection fee typically ranges between $250 and $500, on average. It may be more based on these factors. 

Transfer Fees 

Some communities may require extra after the transfer fees. These communities charge a “preservation and improvement fee” to the tune of $3,500. If you’re purchasing a house in communities like Sun City West and Sun City, this asset preservation fee has to be paid every time there is a change in the property title. 

The buyer covers these fees, and they are a significant addition to closing costs. However, since buyers have to pay out of pocket, they may negotiate to split a larger portion of closing costs with the seller. 

Realtor checking the house before selling

Termite Inspection Fee

In Arizona, termites might be an issue depending on two main factors:

  • Type of material that the house is built out of
  • The location of the property 

If a buyer opts to have a termite inspection, this would cost in the area of $100. 

If everything checks out with the home inspection, and no other problems are uncovered, the sale would proceed. On the other hand, if some fixing is needed and the seller agrees to do the repairs, the sale could proceed as well.  

Appraisal Fee

An appraisal of the property might be required by the lender to ensure that they are not lending more than what the property is with. These appraisals are usually in the range of $450 to $600 based on factors such as:

  • Size 
  • Location, amongst others. 

Title Fees

The title agency usually searches through the county real estate records in order to certify the legal owner of the property. The title agency typically looks out for 

  • Existing mortgages
  • Liens
  • Easements
  • Legal restrictions 
  • Leases
  • Unpaid taxes, amongst others 

All of these must be settled before the sale of the property can proceed. The fees typically range between $1,600-2,500.

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Now that you know who pays the title insurance as well as various closing costs paid by respective parties in the property transaction you’re ready to take a more educated choice when it comes to your property. For the most part, they are negotiable and you could easily save costs on some with the help of your AZ Flat Fee realtor.