closing cost question

zzbb · February 2014

We are trying to decide if we are going to list our house and I'm looking to see how much you would expect to pay on closing cost for a 70,000 home. I'm trying to anticipate money coming out for commission and if the buyer asks for help with closing cost...if we will have anything left. Is it based on the amount of the mortgage or how do I find out?

LoveKiss · February 2014

Generally closing costs are 3-6% of the sale price, with costs being higher on the % range for a lower priced property (because certain closing costs are fixed whether you buy a $70K or a $470K property). Closing costs also vary a lot because of property taxes. Areas with higher property taxes have higher closing costs because of the need for the buyer to escrow more money upfront in order to be ready for that first tax bill. It would not hurt to set up a consultation appointment with a local real estate agent to get the nitty gritty on your house and neighborhood. Agents are used to people asking these kinds of questions in order to make an informed decision.

Pwitty2005 · February 2014

Not trying to hijack the thread, but LoveKiss makes it sound like the 3-6% closing cost includes the property taxes. Everything I've read seems to treat closing costs as entirely different than the property taxes that will be due at closing. I feel more confused the further I get into the mortgage process :-?

As to OP's question, many times if a buyer asks for closing costs, (depending on your local real estate market and how much they want your house) they may actually offer ABOVE your asking price to account for what you would lose by paying closing costs. The important bit of information is that they will not be able to take out a loan for more than the house appraises for, so that may limit whether or not they can offer more than asking price. Conventional mortgages limit the seller to only pay 3% of the selling price to closing costs and FHA limits the seller to paying 6% of the selling price to closing costs.

LoveKiss · February 2014

Pwitty- "Closing costs" are all monies needed to close. They include fees charged by the lender, points, and any money that needs to be escrowed upfront to pay upcoming property taxes, HOA fees, home owner's insurance, etc.. When you close, you may have to pay the seller back for property taxes they paid on the house in advance. For example, we closed on June 8. The owners had paid property taxes for January 1- June 30, meaning they had paid for 22 days of taxes during the period that we would own the house. So we had to pay them back those 22 days worth of property taxes at closing. In addition, the new 6 month tax bill was due to be paid on July 1. We had to escrow the entire amount for that property tax bill so that there would be money available for the mortgage company to pay that bill. All of that was part of the check we needed to write at closing.

zzbb · February 2014

Thank you for the information. Luckly our taxes are only around 200 for the year in this house.

JoanE2012 · February 2014

zzbb said:

Thank you for the information. Luckly our taxes are only around 200 for the year in this house.

I nearly fainted. I'm in NJ and we pay in the 5 figures for our house just on taxes!

zzbb · February 2014

JoanE2012 said:

zzbb said:

Thank you for the information. Luckly our taxes are only around 200 for the year in this house.

I nearly fainted. I'm in NJ and we pay in the 5 figures for our house just on taxes!

See this is insane to me lol. Our mortgage with taxes and insurance is only $430 a month....I can't imagine paying that much or probably more just for taxes.

JoanE2012 · February 2014

zzbb said:

zzbb said:

Thank you for the information. Luckly our taxes are only around 200 for the year in this house.

I nearly fainted. I'm in NJ and we pay in the 5 figures for our house just on taxes!
See this is insane to me lol. Our mortgage with taxes and insurance is only $430 a month....I can't imagine paying that much or probably more just for taxes.

Oh, it's insane to me too! And we don't have a ridiculous house or anything. If all our family weren't here, I'm sure we'd be leaving this state. I'd love to live in North Carolina.

GeorgiaRiah · February 2014

I bought my house for 115k and the closing costs were 5% and that was for everything (taxes included). If you have a FHA loan then you can ask for up to 6% closing costs from the seller and most other loans are 3%.

scotter77 · March 2014

helpful tip, try and negotiate a commission rebate from your agent so at least some of your closing costs are covered. Every little bit helps!

Sillygirl45 · March 2014

We asked for half the closing costs from our seller. When the market was so awful people were getting the seller to pay all of it, but our house had multiple offers in a short time.

The seller wasn't paying any of the original buyers closing costs. It got down to a week before closing and the original buyer didn't actually qualify (mistake on the banks part). So, they took our offer and paid half of ours because it was that or open the house back up to showings (they were moving out of state).

So, if you're in a high demand area, you may not have to pay any closing costs. Your realtor can give you a good idea of what to expect. Good luck!

JoanE2012 · March 2014

We did not ask for help with closing costs. When we were looking last year, good houses were not staying on the market long. I wasn't going to lose our house over closing costs.

zzbb · March 2014

Thanks for the input. We just got an offerast night for over what we were asking and asked for help with some of the closing cost so they could add the amount to the loan...seems too good to be true.

Sisugal · March 2014

Sellers are not paying closing costs for the buyer in our area.

Sillygirl45 · March 2014

zzbb said:

Thanks for the input. We just got an offerast night for over what we were asking and asked for help with some of the closing cost so they could add the amount to the loan...seems too good to be true.

AWESOME!! Congrats! Keep us updated!

zzbb · March 2014

Sisugal said:
Sellers are not paying closing costs for the buyer in our area.

Here it seems like houses are sitting on the market forever and almost always are asked for help with the closing cost esp with the lower priced houses because it's often times someone's first house and cash flow is tighter.

short+sassy · March 2014

zzbb said:

Thanks for the input. We just got an offerast night for over what we were asking and asked for help with some of the closing cost so they could add the amount to the loan...seems too good to be true.

My closing costs were 7.5%, not counting the down payment. But I live in an area with insanely high Home Owner's Insurance, plus I also needed flood insurance.

I bought a foreclosure from a bank and was capped at 6% closing that they could contribute. I offered asking price plus 6% closing. They countered at 3%. I then just countered back sticking firm with 6%, but increased the purchase price so they basically came out the same way. Only now I didn't have to bring as much to the closing table.

It sounds like that is what your current buyers are doing? If so, not so unusual or too good to be true .

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