How Much Are Closing Costs in Colorado

Selling a home in Colorado often means walking away with solid equity, since the state has some of the best appreciation rates across the U.S. Closing costs will take part of that, but knowing what they include ahead of time helps you keep more of your profit.

Closing costs in Colorado average 2.48% of your home’s final sale price. For a median property value of $530,667, the average closing cost is over $13,000. That’s already a big chunk out of your profits, and that doesn’t include realtor commissions! 

In this article, we’ll discuss what closing costs are, what they include, and how to calculate them. We’ll also give you tips on ways to lower them, so you can keep more of your sale proceeds.

What are Closing Costs in Colorado?

Closing costs are the fees that finalize a home sale, and they cover taxes, insurance, administrative charges, and HOA dues. The seller pays most of them, so it’s helpful to be prepared for each one before closing day arrives.

Title Insurance

Title insurance protects you against any loss that may arise from disputes over your home’s ownership, and it safeguards you from the following:

• Undiscovered Liens: A lien is a creditor’s legal claim against the property over an unpaid debt. For example, a contractor who was never paid in full can file a lien and collect what they are owed from the profits.
• Errors: A misspelling or a past owner’s name still on the title can throw the property’s ownership into question. 
• Title Defects: Right-of-way issues, encroachments, and boundary disputes with a neighbor can all cloud the title.

In Colorado, there is no set statewide title insurance cost; each company sets its own price, so your cost can vary widely from one to the next.

Average Cost: $850-$2,500

Property Tax

Property taxes are local taxes collected by your county to fund government services, infrastructure, and public schools. The median property tax across Colorado’s 64 counties is  $1,560 per year, with the lowest taxes paid by Prowers County residents at $494 and the highest by Pitkin County residents at $4,450. Compared to the rest of the United States, Colorado has one of the lowest property tax rates at 0.50%.

Documentary Fee

Local governments in the U.S. charge a fee each time a property changes owners. In other states, this is called a transfer tax, but in Colorado, it’s known as a documentary fee. This fee is charged by the state at a rate of $0.01 per $100 of your home’s selling price. However, if you live in one of these 12 cities in Colorado, you’ll need to pay an additional city transfer tax on top of the doc fee, ranging from 1%-4% of the sale price.

Recording Fee

All real estate transactions are recorded in public records to protect ownership rights. To register the sale, Colorado charges a flat fee of $43 to cover document maintenance costs. 

Survey Fee

A land survey is done to verify your lot measurements and boundaries. With a survey, you can get ahead of possible boundary disputes or encroachment issues, and fix them before ultimately selling. It can cost between $800 and $5,500 per acre, depending on the terrain.

HOA Fees

Average HOA dues in Colorado are about $99 a month, and roughly 40% of homeowners pay them. That said, this is below the national average of $135. Aside from monthly dues, homeowners’ associations also charge HOA transfer fees, ranging from $200 up to $600. This can come as a surprise during closing if it isn’t indicated in the listing disclosure.

Loan Origination Fee

Banks and mortgage lenders charge a loan origination fee to buyers to finance the home purchase. Typically, it’s up to 1% of the loan amount, which is the selling price minus the down payment.

Mortgage Insurance

Mortgage insurance is needed if the buyer’s down payment falls below 20% of the home’s value. This protects the lender in case of buyer default. Mortgage insurance in Colorado is 0.5%-1% of the loan amount, which is spread out over the entire loan term. An FHA loan works differently; with these loans, the buyer pays a mortgage insurance premium regardless of the down payment

What are Other Seller Expenses Aside From Closing Fees in Colorado?

Depending on how you’d like to sell your home for cash in Denver, CO, and other nearby areas, here are some optional seller expenses as you head to the closing table.

Real Estate Agent Commissions

Selling your home on your own can be stressful. You have to set the asking price, market the home, field buyer calls, and negotiate offers, then handle all the paperwork at closing. A realtor can take that off your plate and run the whole process from listing to closing. The tradeoff for that convenience is the realtor fees you pay.

Average Commission Rate: 5.71% of the selling price (2.98% for the seller, and 2.73% for the buyer)

Attorney Fees

Colorado doesn’t require a real estate attorney to close, but some sellers hire one to review the contract or clear up a tricky title. If you do, expect about $150 to $350 an hour, or a flat $500 to $1,500 for the closing.

Professional Cleaning

Trash and clutter can be big turnoffs for potential buyers and make your house feel smaller than it is. Consider having your home professionally cleaned before that big open house to attract serious offers.

Average Cleaning Cost: $0.40 per square foot (Denver, CO); $720 for a 1,800 sq. ft. home

Upgrades 

When selling your Colorado property, if your budget permits, a few renovations can create that strong first impression. Focus on upgrades that give high returns on investment (ROI), such as: 

• Garage Door Replacement (268% ROI): Spending $4,600 on a new garage door adds $12,500 to your asking price. 
• Fiber Cement Siding Replacement (114% ROI): Fiber cement handles Colorado’s hot days and freezing nights better than wood and lasts far longer, which is why it returns so much at resale.
• Kitchen Remodel (113% ROI): You don’t have to go all-in and replace your whole kitchen. Minor changes like new cabinet doors, countertops, updated fixtures, and a modern cooktop cost about $25,000 but add around $31,000 in value.

Utilities

Residents of the Centennial State pay an average of $371 per month on utilities, including electricity, heat, water, and internet. It takes about 75 days to sell a house in Colorado, so while it’s not necessarily a closing fee, you’ll keep paying these bills until the sale is formally closed. 

Seller Concessions

Repairs take time, and if you’re in a rush to sell your house, you may not be willing to invest the time and effort to fix every issue. You can get around this by offering repair credits to the buyer. How much you offer depends on the extent of the damage. For minor cosmetic problems, such as fresh paint, you can offer up to $2,900. If you have major issues, such as an HVAC system replacement, these credits can be over $10,000. 

In Colorado, Who Pays for Closing Costs?

Buyers and sellers are responsible for certain closing costs before the transaction is finalized. Here’s how the responsibilities are usually split: 

As the seller, you’re in charge of paying the following:

• Title Search 
• Title Insurance Fees
• Property Tax
• Documentary Fee
• Survey Fee
• Recording Fee
• HOA Dues and Transfer Fees (if applicable)

On the other hand, the buyer pays the following:

• Loan Origination Fee
• Mortgage Insurance

However, who is responsible for which costs is negotiable, and it often comes down to market conditions. For example, in a buyer’s market where there are more sellers than buyers, you can offer to pay your buyer’s mortgage closing costs to stand out among the competition. In a seller’s market, the buyer can take over most of the payment.

How Much are Seller Closing Costs in Colorado?

Based on a median home’s total purchase price of $530,667, here’s how much you can expect to pay at closing:

• Title Fees: $2,500
• Property Tax: $1,560
• Documentary Fee ($0.01 per $100 of SP): $53
• City Transfer Tax (say 1% of SP): $5,306.67
• Recording Fee: $43
• Survey Fee: $2,300
• HOA Dues (3 months to sell): $297
• HOA Transfer Fee: $600
• Utilities (3 months to sell): $1,113

*SP – selling price

Using a closing cost calculator, it all adds up to $13,772.67, about 2.6% of the selling price. Closing costs typically range from 2% to 5%.

When do Closing Costs Need to be Paid?

As the name implies, closing costs must be paid on closing day. With seller concessions, the repair credits are deducted from the purchase price rather than issued as a separate check. In certain cases, the buyer can include their closing fees in their mortgage, which is reflected in a higher monthly payment.

What are the Ways to Save on Closing Costs?

• Negotiate: Negotiate with everyone you’re working with, whether it’s the surveyor, your agent, title company, or any other real estate professional. Their published rates often have wiggle room for a discount, so it can’t hurt to ask. In a seller’s market where there’s intense buyer competition, your buyer may agree to pay most of the closing costs.
• Work with Cash Home-Buying Companies: Cash home buyers in Colorado, such as We Buy Houses in Denver, often cover a seller’s closing costs. You also won’t need to spend a dime on cleaning or repairs, as this type of buyer typically has a team to handle all that.
• Go FSBO: While not strictly a closing cost, realtor commissions are also paid at closing and take a large share of what you could’ve received. If you go the For Sale by Owner (FSBO) route, you won’t need a realtor, and you can save as much as $15,800 (2.98% of $530,667).

Understanding Your Options for Lowering Closing Costs in Colorado

Closing costs are necessary to finalize a traditional real estate transaction. In Colorado, they vary depending on your property’s location and selling price, but they range between 2%-5%. Negotiating, going FSBO, or selling to cash buyers are some ways to help you keep more of the sale proceeds. 

If you want to eliminate paying for closing costs and agent commissions, We Buy Houses in Denver is here to help. With years of experience in the local real estate market, we’re known for our fair, all-cash offers and quick closings. Just fill out the form below or contact us at 720-738-6020 to receive a free, no-obligation cash offer within 24 hours.