Understanding Closing Costs

There are “closing costs” every time a home sold or bought. These costs include the fees associated with various components involved in a standard real estate transaction.

Typically Buyer Closing Costs:

  • Appraisal fee
  • Origination fee
  • Prepaid interest
  • Prepaid insurance
  • Flood certification fee
  • Tax servicing fee
  • Credit report fee
  • Bank processing fee
  • Recording fee
  • Notary fee
  • Title insurance

Typical Seller Closing Costs: 

As mentioned in a previous post, sellers typically cover the realtor commissions, which generally are 6% (3% for the seller, 3% for the buyer) of the selling price of the property.

Any unpaid property taxes are required to be paid by the seller, too.

Negotiate! 

When it comes to closing costs, buyers tend to have the most wiggle room and allowance for negotiation. Some buyers opt to buy the home at a slightly higher asking price, in return for a credit towards closing costs. For example, if buyer’s are facing $6000 in total closing costs, they could ask to purchase the home for $6000 more–an amount that won’t affect a 15 or 30-year mortgage more than a few dollars each month. The end result is more money in the buyers’ pockets at the time of purchase.

What Does It Cost To Sell a Home?

Whether you’re a first-time homebuyer, first-time seller, or maybe you haven’t bought or sold a home in many years, it’s common to sometimes lose sight how the transaction works come time for selling or buying a home. Especially when it comes to closing costs and commissions paid to realtors. Here’s a quick refresher:

Who pays what is negotiable, but usually the seller fronts the cost for both the selling agent and buying agent fee, which usually is 3% each for the total home value (totaling 6% for both). The fees aren’t added to the home’s purchase price. So, if a house sells for $200,000 and the buy/sell commission is 6 percent ($12,000), the net proceeds (barring other closing costs) are $188,000. Again, usually the seller pays the commission, unless buyer and seller negotiate a split or agree to the buyer assuming the full amount.

If you have any more questions about buying or selling a home, give me a call and let’s talk! (541) 870-3009, or email me at jan.sohlman@integrityagents.com.

Light Up Your Listing!

One of my favorite trends of late is the resurgence of retro light bulbs. It’s a refreshing contrast to modern light bulbs, which until recently had that clinical white/blue glow that isn’t a personal favorite of mine!

Good lighting, which should be warm, soft and easy on the eyes is simple to achieve if you start by choosing the right light bulbs. Today’s LED bulbs have come down in price considerably over the last couple years, and unlike early versions, come in a variety of colors to match the color palette of your home. It makes a huge difference for potential buyers too, so anytime you have photos taken or a real estate showing at your home/listing, be sure the lights are warm and the home is nice and bright.

A favorite of mine are LED bulbs made to look exactly like an incandescent Edison bulb (see photo above). Better yet, they’re low energy and last for years!

Parting thought: Good lighting is key to making your home look warm and inviting to prospective buyers! Choose soft, warm bulbs and be sure the lights are on at your next showing!

Don’t Buy Before You Buy!

Buying a new home is one of life’s greatest thrills. It’s easy to get caught up in the moment and not realize that the homebuying process is just that—a process, not a singular transaction.

What do I mean by that? When you buy a house, from the moment you make an offer and it gets accept to the time of actual closing on your home loan, the process takes sometimes 30 or 60 days to go through escrow, inspection and other due diligences.

It’s during this time, between an accepted offer and a closed deal, that I’ve seen people make mistakes. One of the most common is assuming that because you’ve already been pre-approved for a home loan and have an offer accepted, it’s okay to open a new line or credit somewhere or make a large purchase on one of your existing credit cards.

In reality, this can affect your ability to close on your new home loan and may affect your ability to buy the home altogether! If anything, in the months before and during escrow, it’s best to delay any impulse buys and wait until you have the keys to your new home before you decide to buy new furniture or invest in a new outdoor dining set. This is a critical time and new lines of credit, or new purchases on existing credit lines can change your credit score, which can affect your mortgage rate and bank approval.

So, don’t buy before you buy! Use the time leading up to your closing to decide what you might want to buy after you move in. Resist the temptation to buy on impulse and hold off until the time is right. You’ll be glad you did!