Whether you are buying or selling a house, there are certain fees and closing cost that are in addition to the sales price that need to be paid. In most markets those fees are “Customarily” paid for by the buyer, the seller or both. Real estate agents, real estate investors, cash home buyers, title and escrow officers and lenders are all familiar with them and this post is meant to give you an idea of what you will typically see.
From the time that escrow is opened, the fees are being calculated based on the sales price of the house. It is the title companies job to provide both parties with an estimated closing cost sheet (HUD 1) in advance of the closing. When escrow opened, the buyers earnest money deposit is held as consideration and a down payment for the purchase.
The title company is responsible for gathering all of the information regarding the property and orders a series of reports and begins the title search detailing the ownership and any outstanding liens or judgements against the property. that report is called the preliminary title report. Once the preliminary title report has been completed and all of the title companies conditions have been met, the title company submits their fee schedule to the seller, the buyer and the buyers lender.
When the lender’s underwriter has released all of it lending conditions and approves the loan to move forward it issues a “Clear to Close” and the lender prepares a Closing Disclosure which itemizes all of the funding fees, closing costs and buyers and seller conditions with any associated cost. By law, the buyer has 72 hours to review that Closing Disclosure and it fees before the signing/closing.
What Are the Closing Costs in Stockton?
Closing costs refer to all of the fees that must be paid at the closing table. Depending on where you live, the fees and costs can vary. But generally, closing costs include, but are not limited to:
- Notary fees
- Transfer Costs
- Transfer Taxes
- Appraisal Costs
- Inspection Fees
- Origination Fees
- Recordings Fees
- Title Insurance
- Underwriting Fees
- Bank Fees
- Courier Fees
- Wire Transfer Fees
- Prorated Property Taxes
- Liens against the home will need to be paid to clear the title
- Credit Report Fees
- Administrative Fees
- Attorney Fees, If Applicable
- The balance of your mortgage or loans against the home
- Possibly repairs or pest control if this has previously been agreed upon
- Natural Hazards Disclosure
While the buyer is usually paying for a majority of these cost, they are typically very small individual fees that get tacked on. $25.00 for one thing and $7.50 for another. Depending on where people are located some title companies will often hire mobile notary publics to meet with buyers and or sellers wherever they may be (as a convenience) and charge an appropriate fee to have documents signed.
Typically the single largest item or fee that the seller pays is 100% of both sides of the real estate agents commission. This ranges from between 4.5% to 6%+ of the final sale price. Other than your possible mortgage balance, this is typically the largest itemized cost unless there are substantial seller credits that the buyer requested for repairs, down payments, etc.
Each real estate transaction is different and so from time to time there may be one party or the other that is paying for another item negotiated prior to closing. It is not uncommon for either of the parties to negotiate many of the other costs during the sale process and it is becoming increasingly popular.
The market conditions also play a role in what is customarily paid by whom. Motivated Sellers in a Buyers market may decide to pick up all of the closing cost for buyers just to be able to sell the house. It is also not uncommon for buyers in a buyers market to ask for a number of repairs. Sometimes the value of those repairs are given to the buyer as a credit at the closing. In an effort to lure in more buyers, sellers are more frequently picking up the tab when it comes to the closing costs.
As a seller, the current year’s property taxes will be prorated up and until the day of closing. Any HOA fees or other community costs should be prorated as well and paid at closing through escrow and title.
What Are Seller Credits?
These are the seller concessions negotiated between the buyer and seller. It can be a dollar amount for each item or a percentage that the seller agrees to pay towards the closing costs. For example, sellers are often asked to credit the buyer $3,000 towards closing to help get the overall cost of the fees down and show up as a discount for the buyer. Some sellers are savvy to these credits and use the counter offer to increase the cost of the house by an amount equal to the cost of the credits being requested. I have seen real estate agents also forgo a portion of the commission to accommodate the buyer or seller demands. One thing is for certain there are many creative ways to structure the sale and the costs will be tallied by the title company.
Can You Avoid These Closing Costs?
The short answer is Yes! Not all houses are sold conventionally and when sellers locate a real estate investor or cash home buyer in Stockton it is not uncommon for the buyer to pay all of the closing cost.
In addition, a cash home buyer will not charge sellers any commission. Many times, home buyers will offer to pick up all costs, which will save thousands of dollars at closing.
Are Repairs Included?
Only if the seller and the buyer agree that they will be included. I have written many articles about home inspections and even though 98% of all buyers order home inspections, sellers are not obligated to make any repairs, regardless of the issues found. Certainly buyers can ask, but ultimately it is up to the seller to choose to make any repairs.
As a side note, all houses in California are sold as is. Of course as the seller, you need to disclose any problems or defects with your house whether or not you have actually lived in it. If the home is in need of some obvious repairs, the seller will often take care of these prior to putting the home on the market.
The Alternative Sale With a Built in Closing Date
In real estate it is known as the “sure thing.” It is an all cash offer where the BUYER PAYS ALL OF THE CLOSING COST. There are no inspections, no contingencies, no lenders, no inspections, no appraisals, no repairs no upgrades, no cleanup and it comes with confirmed closing date with no backing out. NO WAY?
My name is Peter Westbrook and I am a real estate Investor and a Stockton, Sacramento, and Modesto. It should come as no surprise that not every house is going to get a fair shake on the market have the best representation or even going to get a top of market offer. The real estate industry has changed and it might be clear that there are many ways to cash out of your house.
We Buy Houses in Stockton, Sacramento and Modesto and we are a great solution for selling your house fast especially if it needs a lot of work. Why not at least consider an all cash offer. We buy houses in any condition and we pay fair market value minus the cost of repairs and some holding cost. In a lot of cases the balance sheet comparing an all cash sale with a conventional buyer that needs financing, is on our side because we are not going to ask you to fix anything.
If your goal is to spend the least amount of money while putting the most amount of your equity back in your pocket, give me a call at (209)481-7780. With over 10 years of experience, I have helped hundreds of families and their houses get out of complicated and costly real estate issues. I am an expert and I can help you tun that house that is currently a liability back into an asset.
I admit that we may not be for everyone, but I would like to talk to you about how we do business and how we can help you. While no one can promise that they will buy your house sight unseen for whatever amount that you want, we will sit down and make a fair cash offer that will in most cases exceed what you can get if you chased the market conventionally. No Commissions, no frustrating meeting with real estate agents, no marketing, no cleaning, no fixes, inspections, no appraisals and no contingencies.
Give us a call at (209)481-7780. What have you got to lose, you may just find out that selling directly to us is your best alternative. In either case you will be get a better picture of your options, understand your houses worth and be able to make more informed decision. We’d love to earn your business.
If you would like to learn more about the selling process or if you have any questions about selling your Stockton home, send us an email using this form, or give our office a call now! (209)481-7780