South Dakota closing costs

Set at least 2% to 5% of the home's price aside if you're buying in the Mount Rushmore State

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A lot of people think that buying a house in South Dakota means just paying the listed price. This isn’t true. There are several more costs you need to consider before becoming a South Dakota homeowner. These charges, called closing costs, can be significant and could run you well over your budget if you don’t account for them.

The average South Dakota home costs $232,564, and average closing costs total 1.34% of the home’s price. Therefore, homeowners in the Mount Rushmore State pay an average of $3,105 in closing costs. Learn how to reduce closing costs and make buying your home a better experience.


Key insights

Expect to pay around 2% to 5% of your home’s price in closing costs.

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Most closing costs are negotiable. This means that you can ask the seller and lending company to cover some of them.

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Many companies offer services included in closing costs. Compare their prices to reduce the total amount you owe.

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You can use discount points to increase your closing costs but reduce your mortgage interest.

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What are South Dakota closing costs?

When buying a home in South Dakota, you must pay for a few services that facilitate the purchase, like title insurance fees and appraisal costs. Simply put, closing costs are all the extra charges you must pay for your home besides the down payment or purchase price.

Discount points increase closing costs but reduce long-term interest. It can be a good idea to buy discount points if you have money to spend upfront.

Some closing costs you can expect to encounter include origination fees, title insurance, appraisal fees and discount points. These costs are split between you and the seller, but some are negotiable, meaning they can be paid by either party.

It’s essential to anticipate and budget for closing costs to avoid exceeding your budget when buying a home.

What closing costs are the buyers expected to pay in South Dakota?

Homebuyers in South Dakota are expected to pay several closing costs depending on whether they’re paying cash or financing the mortgage. Here are some of the closing costs you should include in your budget:

  • Mortgage points (discount points): This is an upfront payment you can make to reduce your mortgage interest. Most companies offer mortgage points as an optional step to make mortgage payments easier.
  • Title search fees: A title search involves looking up the property's title to ensure it's not under contention.
  • Appraisal fees: Mortgage companies require you to pay for the appraisal process, ensuring the home is worth the money they’re lending you.
  • Origination fee: Mortgage companies charge an origination fee to cover administrative costs. These fees are calculated as a percentage of the total loan amount and are often the most significant charges you must pay to close your mortgage.
  • Escrow deposit: Some mortgage companies require a deposit of a few months of property tax and mortgage insurance payments into an escrow account.
  • Prepaid interest: If you purchase property past the beginning of the month, the mortgage company calculates the interest for the remaining days of the month, and you pay it as prepaid interest.
  • Title insurance fees: Title insurance protects you if problems arise with the title.
  • Home inspection fees: While inspecting a home before a purchase is not required, most homeowners in South Dakota prefer to pay for an inspection to avoid nasty surprises.

The charges above are the most common closing costs in South Dakota. However, it’s essential to talk to your agent to learn if there are more on the property you intend to buy.

Due to a recent settlement, buyers and sellers can negotiate agent commissions, which were previously fixed charges, beginning in August 2024.

Is the buyer or seller responsible for closing costs in South Dakota?

Closing costs in South Dakota are paid by both sellers and buyers. However, the seller must only pay a few costs, with the rest being negotiable. Therefore, discussing closing costs with the seller while negotiating the purchase is essential to determine which costs they're willing to pay.

In most instances, the seller pays the transfer fees, prorated property taxes and agent commissions. They also pay for their real estate attorneys if they have them.

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How much are closing costs in South Dakota?

Closing costs can be significant depending on the property's value. It’s therefore important to know how much you should pay to plan adequately.

If you're planning to buy a home in South Dakota, you should set aside at least 1.34% of the property's price, which is the state average. Below is a better breakdown of what you'll be paying for:

*According to a 2023 survey by the National Association of Realtors

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How to save on closing costs in South Dakota

The amount of closing costs you must pay in South Dakota can be hard to hear. It’s even more stressful when you discover them when buying a home. Fortunately, you can use a few hacks to reduce closing costs and get your home at a discount. Here are some of them:

  • Compare different service providers: Multiple companies offer the services you need to purchase your home. Get quotes from different service providers and choose the most affordable one.
  • Buy later in the month: This reduces your prepaid interest. The earlier in the month you buy a property, the higher the prepaid interest will be.
  • Convince the seller to pay some closing costs: The seller is only required to pay a handful of closing costs. However, most other closing costs are negotiable, and either of you can pay. Therefore, you should bargain for the seller to pay closing costs while negotiating to buy the house.
  • Negotiate: Ensure you negotiate for all negotiable services and get the best deal each time. You can even negotiate with your mortgage company to pay closing costs like credit and appraisal fees.

Once you take the steps above, you'll be better positioned to reduce your closing costs. Remember, the most important thing is to negotiate. To compare good mortgage companies, look at our list of the best mortgage lenders in 2024.

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    FAQ

    Are closing costs in South Dakota high?

    No, average closing costs in South Dakota are 1.34% of the buying price, or $3,105, on average. This is lower than the national average of 1.81%.

    Are closing costs mandatory in South Dakota?

    Yes, the term “closing costs” means that you have to pay them before the deal is sealed. However, in South Dakota, they're negotiable, so you don't have to pay them all. You can negotiate with the seller and your mortgage lender to pay for some of it.

    What do I do if I can't afford closing costs?

    Most mortgage companies can offer credit for your closing costs. However, that increases your mortgage interest.

    What are the average seller’s closing costs in South Dakota?

    The average seller’s closing costs in South Dakota are 3.33% of the home’s selling price.

    Bottom line

    Closing costs are a headache for homebuyers who don’t plan for them. Individually, they sound insignificant, but they often add up to large sums totaling thousands of dollars. That’s why you should budget for them and negotiate with everyone involved with the purchase to keep them as low as possible.


    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. CoreLogic, “Average Closing Costs for Purchase Mortgages Increased 13.4% in 2021, CoreLogic’s ClosingCorp Reports.” Accessed June 24, 2024.
    2. National Association of Realtors, “Appraisal Survey.” Accessed June 24, 2024.
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