Closing costs are the fees associated with your home purchase and home loan at the end of a real estate transaction. For many home buyers, closing costs can be more than just an inconvenience. Ranging anywhere from 2-5% of your home’s purchase price, these small fees can add up to thousands of dollars in extra spending. However, after you have completed your mortgage checklist, one age old question offers some hope: who pays closing costs? If you think that home buyers are solely responsible for the financial burden, think again. Real estate sellers can often be persuaded to chip in, too. This is why it is important to know the ins and outs of closing costs so that you can ensure that you are getting the best deal on your dream home. Keep reading below to find out how you can work out who pays closing costs and save yourself a lot of cash.
Who Really Pays?
The buyer pays most of the actual closing costs. However, there are many costs that go into closing a luxury home property sale. While the buyer (whether they realize or not) is paying for the cost to complete the sale within the transaction, there are additional closing expenses as well. In addition, the seller must pay for the realtor commissions which can be as much as 6% to cover both sides. Thus, depending on how you break it up, the buyer ends up paying the majority of the closing fees for attorneys, credit reports, land origination, appraisals and title insurance. Of course, in a property sale, everything is up for negotiation.
Make A Strong Offer
The first step to a successful negotiation on closing costs is to make a strong offer. Consult with your real estate agent and consider what you are willing to pay for the property. You may want to leave room for further negotiation, but try not to low ball them. Depending on your market timing, the property can have significant interest. You may be tempted to get a good deal on the house, but cutting your closing costs could pay off much more in the long run.
Be Quick To Close
Home sellers often want to be done with the whole process as soon as possible. Even if you offer slightly less for the house than someone else, the willingness to close quickly can be a major boost in your chances of obtaining the property. Whether you are looking for a home in Comox Valley or Kansas City, sellers will probably respond favorably to a quick close. If you are willing to go through the speedy process, make that a part of your offer.
Limit Other Demands
After you have found a solution from Cobalt Mortgages or a similar institution, you are going to want to find another way to butter the seller up for closing cost negotiations. One such way is to limit other demands. For example, they may be more willing to share your closing costs if less renovation is required to come out of their pocket. We understand that you need new hardwood floors, but the cost of having that work done yourself is probably significantly less than what you could save by limiting your closing costs.
After you have set yourself up as an ideal buyer, it is important to begin negotiating closing cost prices immediately. Your real estate agent will surely assist you, but keep in mind your financial limits. Many sellers may offer to cut the price of the home by a few thousand dollars in exchange for you paying your full closing costs. However, it is important to remember that closing costs will come out of your pocket right now, while the home price will be paid off over many years. If you do not want to spend thousands now as a smart business decision, make sure that you are getting a discount on the closing costs rather than the home itself.
Offer To Split It
Finally, your last hope may be to split the bill. Not all home sellers can afford to pay closing costs for the both of you. Instead, consider asking them to contribute what they can to your fees. Many sellers will pay as much as they can in order to ensure that the deal finishes quickly and smoothly.
If you are interested in buying a home, whether you are want to live in one of the largest megacities or the smallest towns, and were curious about who pays closing costs, you have come to the right place. While the buyers and sellers both have different financial responsibilities, you can convince them to ease your burden by following the tips above.
Photo from http://www.creekviewrealty.com/who-pays-closing-costs/