Closing Cost--beginner Question
When someone sells their house normally what specific closing costs are there?
I was talking to a potential Sub2 seller and kind of choked on his question "What specific selling costs do I have? Brain cramp...I could only come up with legal fees. I think the "seller" lost confidence after that as I blustered through the answer.
JK
Arwen
Thanks...I should have thought of it sooner...duh!
Only part missing from it would be the legal fees for the seller (review of docs etc). Here in MA with teh buyer normally paying all major costs (title, surveys etc) if closing costs reach 1% its a lot ...although a septic inspection/test will add a chunk to those that ahve them.
If I add in holding costs it may just reach 2%.
Thanks for your help!
John
Quote:
On 2005-11-10 09:26, Arwen wrote:
JK-
Do you own your own home? Take a look at your closing statement to see what the seller had to pay to sell to you ...
http://www.2ownahome.com/mortgage_closing_costs.htm
Read here a while and then think it out that the loan is already in place. Do you want protection, survey, inspections etc. The biggest cost is the loan fees and docs, but because you are taking subject to, there are no major costs there. Some lenders allow it and on older VA/FHA loans you can tahe a property subject to with full knowledge of the lender. They may make a couple hundred dollar transfer fee but If you are worried about 200 cost in real estate you are not ready to buy. Hope this helps. It is pick and choose with a lot of cost depending on the risk you want to take.
On a conventional deal there will be
1.transfer tax (in my state there is 2%)
2.title insurance
3.recording fees
4.realtor commission
5.inspection
6. title company fees
7. deed review
8.points(in some mortgages there are points which have to be paid)
This is great! I appreciate all the comments!...but perhaps this is a regional thing...In MA all the costs you mentioned except the commission are the BUYERS costs...are there any closing costs that would definitely be the sellers in a traditional sale? -- excluding their future purchase.
Havent we all heard that sellers would face up to 15% costs of which 3% is closing costs? I am looking to see if that is true.
John
On a conventional deal there will be
1.transfer tax (in my state there is 2%)
2.title insurance
3.recording fees
4.realtor commission
5.inspection
6. title company fees
7. deed review
8.points(in some mortgages there are points which have to be paid)
transfer tax in my area is tradionally split between the buyer and the seller.
POINTS are definetly the sellers closing costs.
Most closing costs can be paid by either party and are fully neg,
I’m not sure where 15% comes from, as that is awfully high. But as has been indicated, a lot of the closing costs can be paid by either the buyer or the seller, and is often a point of negotiation in any offer.
But when you’re presenting to them, don’t forget to point out that any unpaid taxes, interest or mortgage payments due will be prorated and will end up in the closing costs as well.
In Mass the seller pays a transfer tax of $4.56 per thousand
to the state. as the seller you must also have a new deed prepared showing the transfer of ownership these fees can vary
as they are paid to a lawyer. Then you have to pay recording fees to the registry of deeds.
[ Edited by kevnhl25 on Date 11/08/2005 ][ Edited by kevnhl25 on Date 11/08/2005 ]
JGK03,
Sorry for my confusion. I didn’t realize you were including any repairs or negotiated discount of price in your 15%. But those are definitely legitimate when showing them what they’re really looking at.
I try to keep the percentages low, to give them the benefit of doubt, but show them everything I can think of.
For example, regarding holding costs, are there utilities that need to be left on? Are there HOA dues to be paid? Landscape maintenance? Etc., etc.
And while the prorated costs aren’t non-recurring closing costs, they can certainly end up on the debit side of their Hud-1.
Obviously, the whole point is to show people they don’t necessarily have the net equity they think they do. So, show them whatever you can.
: )
It really sounds like you need a buyer’s presentation. I don’t believe you can just go up to a seller and say hey sell me your house for 15% less because you will have these costs anyway.
The buyer’s presentation is a very on purpose conversation about how ugly the house is and how you can get the seller the cash they need in the time they need it in.
A Realtor will come in and say the house looks great, you need to go in and point out the crappy parts... And there isn’t anything wrong with saying this is the ugliest house I have ever seen. Even if it is a beautiful house you must find the motivation for the seller to sell you at a reduced price...
Sellers know what we do, it is your job to find their hot button.
We only buy distressed houses; either the seller is distressed or the house is...
They called you because they want to sell you their house…
Besides you should not go out to sellers before you have qualified them? Your inbound script should have determined the reason for selling and determined their motivation.
JK-
Do you own your own home? Take a look at your closing statement to see what the seller had to pay to sell to you ...
Points on a mortgage are negotiable and it is not at all uncommon for the seller to pay points. On some federal loans FHA and VA there may be requirements for fees not on other loans and Discount points for an FHA-insured mortgage may be paid by you as the homebuyer, by the homebuilder, or by the person selling the house.
VA allows either I believe to pay points but does not allow those cost to be financed in the loan amount, although other closing cost can be.
ttime,
Glad to meet you.
Maybe John himself should tell you why he is not selling his course anymore.
When I first started selling my course along with the $689 investment came lifetime one on one email with me, a password protected website to network with investors and bird dogs and my personal cell phone number when a student needs advice fast.
I set a point where when I had a certain number of students to advise that I would cease selling the course and that point came. I felt that since I took a personal interest in helping my students succeed that it was never about selling courses only about giving back what I learned about creative investing, however a person needed to make an investment in me to show their willingness to learn.
So a used copy as someone was looking for does not have the benefits that my students who made the investment when the course was being sold does
Are my students out doing deals, I could fill up this board with success stories from those that applied what they learned.
John $Cash$ Locke
[addsig]
Quote:
On 2005-09-28 09:12, JohnLocke wrote:
So a used copy as someone was looking for does not have the benefits that my students who made the investment when the course was being sold does
Well, John, I can appreciate your position and your dedication. I was the one looking for a course. If you are already at your maximum number of students, could you possibly recommend someone else who might want to take on a student?
writebrain,
There is one person that I feel gives a student great information concerning Subject To investing. We have sit down together and talked investing so I know he understands what it takes.
Bill Bronchick would be my recommendation you can find him at www.legalwiz.com
One of the good guys.
John $Cash$ Locke
[addsig]
John,
Sorry to hear you have retired from the teaching biz. I count myself lucky to be one of your students. You are right about sucess stories I owe all of my sucess to your course and help.. Thank you again and I hope that my life time of help means you will be with us for a long long time.
J
John Locke,
Glad to meet you.
Thank you for the post and referral. If we had more honest people like you, this would be a much better place. I will check out Bill Bronchick.
Don
Noooooooooooooo!!!
I was about to buy your course Mr. Jhon.
Is there anyway I could buy it, even though the extras are not included?
Thanks
OOPS! Sorry. Newbie error.
Tricky