Minimizing Closing Costs, Maximizing Profit
A property’s “sticker price” is a solid indicator of its overall worth, but the transaction itself can involve many other fees. Third-party payments to the realtors, mortgage brokers and administrators that helped facilitate a home’s sale are known as “closing costs.” The specific services that make up these costs vary widely from state to state, but they can add up a significant amount of money — up to 7% of the home’s purchase price in many areas.
Who Is Responsible for Closing Costs?
In the typical real estate transaction, both the buyer and seller will pitch in to cover different parts of the total closing cost. Fees associated with mortgages — loan originations, credit reports, appraisal, stamp taxes and more — are typically a major component of the overall figure, so the responsibility for them is considered to be the buyer’s.
Sellers are expected to pay taxes on the income from the property’s sale, as well as administrative fees for the closing and title transfer. They are also responsible for realtor commission (if applicable) — a sum that can account for up to 7% of the home’s sale price.
How To Save on Closing Costs
One major concern for sellers are the fees for any repairs or maintenance required to make the house saleable. Practicing responsible home care and fixing problems before they become major is an excellent way to avoid future surprise charges.
Buyers, for whom mortgage fees make up a large part of typical closing costs, can opt to pay for cash instead. If that isn’t possible, examining the different fees that make up a Loan Estimate document will often pay off. Buyers review it with their financial advisor or a trusted friend to mark any unnecessary or padded fees, and negotiate the ones that stay. After the transaction is finalized, the lender must also provide a Closing Disclosure form that details the cost breakdown: buyers should carefully compare this document to the original estimation and investigate any discrepancies.
Brokerage Services & Property Management in NY, NJ, PA and Beyond
New Vistas property management professionals are here to ensure your property is in tip-top shape throughout all seasons. Good real estate care means reduced closing costs and ultimately increased sale profit, so visit our homepage to get started today.