📝Closing Costs: What does this Mean?
Buying a home continues to be, most likely, an individual’s most expensive life purchase. With this purchase, comes fees that some first time home buyers may not be aware of. Some specific fees that may come as a surprise entail closing costs. This blogpost will enlighten you about the importance of these costs, specific fees associated, and tips on how to negotiate with the seller. Closing costs involve various expenses that buyers and sellers incur to successfully complete a real estate transaction. Whether you are refinancing your home’s mortgage or purchasing a new home, closing costs remain relevant in both instances. The total amount of closing costs depends on individual real estate transactions. Furthemore, the associated fees vary, depending on the location and the fluctuating market.
For example, many home buyers pay between 2-5% of the home loan amount to cover closing costs. With these figures in mind, if you purchase a home that costs $150,000, expect closing costs to sit between $3,000 and $7,000. According to a recent survey, the average home buyer/seller pays around $3,700 in closing costs. The following list includes some more concrete examples of what closing costs embodies: loan origination fees, discount points, appraisal fees, title searches, underwriting fee, title insurance, credit report charges, surveys, deed-recording fees, flood determination, home inspection, document preparation and more.
💸Who Pays: Buyer or Seller?
If you are the buyer, you can take a breather. Typically, sellers pay up to a certain percentage or all of the deal’s associated costs. However, the agents of the buyer and seller can negotiate how much each party pays if there is a discrepancy. As a buyer, you can avoid paying high closing costs by avoiding a low-ball offer and ensure a quick close date. Of course, sellers want to sell their home quickly. Instead of offering the seller $5,000 less than asking price, state in your contract you will pay the asking price as long as the seller pays all closing fees. This helps buyers to avoid the extra fees and ensures a quick sale for the seller.
Also, remember these costs can be negotiated down. Items like attorney fees, courier or mailing costs can be avoided. Some lenders offer lower closing costs because they do not utilize the high administrative add-ons. Make sure to confide in your real estate agent or loan officer regarding closing costs. Both parties attain knowledge and experience to ensure that you feel comfortable and the transaction goes smoothly.
Sioux Falls Realtor
If you have any hesitations or question about closing costs and the processes involved, please contact your loan officer or realtor. If you live in the Sioux Falls area, contact Regan Laughlin, broker/owner, at RL Real Estate. She is happy to assist you with any of your real estate needs. To see active listings in Sioux Falls, click here.