I am a licensed r/e agent. Closing costs vary a little depending on where you are going to close. If you are financing the property, the bank will make sure you get title insurance. If you paying cash, get it anyway. ALWAYS get title insurance - if you don’t get it you will eventually get burned. In most states, the cost of title insurance is regulated by the state govt, thus this cannot vary any. Almost all title companies will have approx $500 worth of miscellaneous charges (courier, attorney, filing, etc.) so that is common. The balance is usually your financing costs (survey, appraisal, etc.). If your paying cash, this should be a very small amount. BUT, let me stress this very important point - it behooves you to establish a good relationship w/ a efficient title company (closing agent). They can make your deals very smooth or shipwreck you at the closing table. If you have to pay a few more fees to get a good title company - it is worth it!
Hi, I am working on my first deal with a realtor on a fixer upper that I would like to flip or rent. It is a fannie mae repo. In creating an offer with the realtor, he drew up the paperwork and said that the closing costs would be about $4500 on a purchase of $35,000. This would include escrowed taxes and transfer tax. In alot of the things I read, there is little mention of closing costs this high and the best way to deal with this. Can anybody help? The sale price of this property in 1996 was $86k. It has been severely neglected and trashed by 15 dogs that lived there.
Thanks, Chris
Posted by JohnWe (NoCA) on March 19, 2001 at 19:56:17:
This is too high.
You need a detailed breakdown of what all these costs are for. If you see anything like prepaid interest, that’s okay – that’s just prepaying on the $35K loan, and you would have to pay that anyway, they’re just getting that up front. Title insurance is another necessary evil that unfortunately costs money if you’re getting new financing. These should be your biggest costs. Taxes shouldn’t be that much. If you have other things in there that are adding up to $4500, find your own title/escrow company, and tell the realtor that you want to work through them.