Colorado Closing Costs Explained
What are closing costs in Colorado, who pays what, and how much should you actually budget? A plain-English breakdown for buyers and sellers in Denver.
Closing costs are one of the least-discussed parts of a real estate transaction until they show up on the Settlement Statement three days before closing. By then, there's no time to be surprised. This guide walks through what closing costs are, who pays them, and how much to budget.
What Are Closing Costs?
Closing costs are fees and expenses paid at the time of closing — separate from the purchase price — that cover the services required to complete the transaction. They include things like lender fees, title insurance, recording fees, prepaid insurance and taxes, and various administrative charges.
Both buyers and sellers have closing costs, though they're different in nature and amount.
Buyer Closing Costs in Colorado
Buyers can expect to pay 1.5–3% of the purchase price** in closing costs. On a $700,000 home, that's $10,500–$21,000 — a meaningful number to plan for.
Lender Fees
These are fees charged by your mortgage lender for originating the loan:
- Origination fee: 0–1% of loan amount (varies by lender)
- Discount points: Optional — you can pay points upfront to buy down your interest rate
- Underwriting fee: Typically $300–$750
- Appraisal fee: $500–$800 for a standard appraisal (paid upfront, before closing)
- Credit report fee: $25–$50
Title and Escrow Fees
Colorado typically uses title companies to handle closings (rather than attorneys, as in some states).
- Owner's title insurance: Protects you from prior claims on the property; one-time fee (often paid by the seller though everything is negotiable)
- Lender's title insurance: Required by your lender; covers the loan amount
- Title search and examination fee: $150–$300
- Closing/settlement fee: $350–$500
Government Fees
- Recording fees: Typically $50–$150 for recording the deed and mortgage with the county
- Transfer taxes: Colorado has a documentary fee of $0.01 per $100 of purchase price — minimal
Prepaids and Escrow Deposits
These aren't fees for services — they're prepayments of ongoing expenses the lender requires upfront:
- Prepaid homeowner's insurance: First year's premium paid at closing; varies by home size and location
- Prepaid property taxes: Typically 2–3 months of property taxes deposited into escrow
- Prepaid mortgage interest: Interest from closing date to end of first calendar month
A Note on the Loan Estimate
Within 3 business days of submitting a loan application, your lender is required to provide a Loan Estimate that itemizes expected closing costs.
Seller Closing Costs in Colorado
Sellers typically pay 6–8% of the sale price in closing-related costs that include title insurance, closing fees and agent compensation.
Agent Commission
This is typically the largest cost you'll encounter when selling your home, and it's also one of the most misunderstood. Compensation is fully negotiable on both sides, and any offer of buyer's agent compensation is handled on an offer-by-offer basis, not predetermined when you list.
Before you sign a listing agreement, we'll have a direct conversation about my compensation and how, or whether, you want to offer anything to a buyer's agent. There's no one-size-fits-all answer here, and I'll help you think through the trade-offs so you can make a decision that makes sense for your situation.
Title and Closing Fees
- Owner's title insurance: In Denver, it's common for the seller to pay for the owner's title insurance policy — but this is negotiable
- Closing/settlement fee: $350–$500 (often split)
- Recording fees: Minor
Prorated Property Taxes
Colorado property taxes are paid in arrears (you pay this year's taxes next year). At closing, sellers typically credit buyers for the portion of the year's taxes that have accrued but not yet been paid. On a $700,000 home with ~$4,000/year in taxes, a closing in May means roughly $1,600 in prorated tax credit to the buyer.
Payoff of Existing Mortgage
Not technically a closing cost, but sellers must pay off any existing mortgage out of proceeds. Your lender will provide a payoff statement showing the exact amount.
Who Pays What Is Negotiable
The convention above is what's typical in Colorado — but almost everything is negotiable. In a buyer's market, sellers sometimes offer concessions to cover some of the buyer's closing costs. In a competitive offer situation, the buyer might offer to cover costs typically borne by the seller.
When I present your net sheet, everything will be itemized and explained so there are no surprises at the closing table.
Getting a True Net Number
As your listing agent, one of the first things I'll provide is a net sheet — a projection of your proceeds after all fees and costs. This is how you'll know exactly what you're walking away with before you ever accept an offer.
On the buyer side, your lender will provide a cash-to-close estimate that includes both your down payment and all closing costs. That's the wire amount you'll need to have ready before closing day.
About the Author
Scot Conti
Broker Associate at West + Main Homes. Berkeley resident, former architectural photographer, and your guide to Denver Metro real estate.
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