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on a For Sale by Owner on $450k hom, what are all the costs I need to plan for, such as closing cost

No realtor involved, For sale by owner.  All costs I need to plan for.  Including closing costs?

thanks
  • January 17 2013 - Oakley
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Answers (5)

There is a common misperception that in real estate, a transaction will have closing costs, and the buyer and seller need to figure out how to split them.  This is not accurate.

I've been licensed in nearly 10 different states over my 20 year career in real estate, and that misperception has been everywhere.

The reality is that there are buyer closing costs, and seller closing costs.  Sometimes buyers may ask a seller to pay some of their costs, otherwise, tradition or rule govern who pays what.  There is no conspiracy here, buyer typically pays costs related to buyer obtaining a mortgage, and seller pays costs to transfer title.  Buyers closing costs are much higher, often around 2-3%, depending on their lender.  

As a member of the Cincinnati Area Board of Realtors, I know that most sellers closing costs are tiny.  Ohio is one of those states that doesn't tax the transaction through lots of fees, other than the small 0.3% or so transfer fee, and a few hundred dollars for deed preparation/closing, and most sellers are good to go.

To get exact quotes, a buyer should get a Good Faith Estimate GFE from their lender, and a seller should get a closing quote from a title company.

Good luck, my company helps FSBO sellers on a daily basis, more assistance and educational blog entries are available if you click through to my website.  Thank you. 
  • January 18 2013
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If you are negotiating the price of the home with the seller, depending on how much they discount it, they may not be willing to contribute to your closing costs as well.

Since you are not using an agent, I would recommend retaining the services of an attorney to review your documents before you sign then, do your title search and close your transaction.  A title company does not give you the same legal representation.
  • January 18 2013
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thanks to both for great answers, very helpful.  so if we assume 3 to 5% thus $13,500 to $22,500?  wow...

What is reasonable negotiation, 50%?

Thanks again
  • January 18 2013
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Everything is negotiable, never forget that.  But assuming this is a standard sale transaction, the buyer can expect to pay about 3-5% in closing costs plus his/her downpayment.  Typical real estate closing costs would include:

-- Your escrow/attorney fees (depending on what state you're in)
-- Your title insurance fees (if you're getting a loan)
-- Your loan origination fees
-- Your loan interest per diem charges (depending on what day of the month you close escrow)
-- Your portion of the property taxes (depending on when during the year you buy the property)
-- Homeowner's insurance (fire, theft, earthquake)
-- HOA transfer and reinstatement fees (if any)
-- Termite repair fees (if Section 2 Termite)
-- Miscellaneous document filing and recording fees

Ask your mortgage broker (if you're getting a loan) to provide you a close estimation of your total closing costs so you are not hit with any last minute surprises.  Hope that helps you.
  • January 17 2013
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What You Can Expect to Pay For When Buying Real Estate



  • Title Insurance - Premiums for a title policy on your property based on your loan amount
     
  •  Escrow Fee - Is for the escrow company to process all of the property documents- Usually split 50/50 with the seller 
     
  • Escrow Document Preparation Fee
     
  • Notary Fees - A fee is charged to notarized documents that will be recorded at the county recorder's office.
     
  • Recording Charges for all documents in the Buyer's name
     
  • Interest on new loan from date of funding to 30 days prior to first payment
     
  • All new loan charges - this could include a fee for credit reports, applications, etc.
     
  • Tax Proration - a prorated amount from the date of ownership.
     
  • Homeowner's Association Transfer Fee (if a condo, town home or planned unit development)
     
  • Fire Insurance Premium for the 1st year
  • January 17 2013
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