It’s a buyers market out there – no doubt. Sellers of houses have to make concessions – sometimes more and sometimes less. One of those concessions is to pay the closing costs for buyers who do not have much cash for a down payment. They will offer full price or almost full price and ask you to pay for their closing costs in return. Sometimes this is a good deal for and sometimes it is not. If you decided to go for such a deal, here are a few tips that can save you a lot of money.
If you receive such an offer, make sure to read the contract properly. This is even more needed when doing such an offer. Just because you accept to pay the buyer’s closing costs, it does not mean you have to pay for everything. Sure, you want to pay those items needed to get the deal through – that should be your main goal, but you can be creative and still have the deal go through.
I have been the seller in one of those transactions and I got fooled into an offer like the one mentioned above, but accepted it without conditions. Next time I will be smarter. Here are some items I recommend you to place as conditional into the contract when accepting an offer.
1) House Inspection: On my new house I paid $325 for the house inspector and the guy was really good. Upon selling my house and receiving the final settlement numbers the buyer used an inspector that charged $450. The house I was selling was 1/3 smaller than the one I bought and so it ticked me off that I paid over 1/3 more on the inspection for the smaller house. Sure, inspections are usually flat-fee based, but that does not mean I should pay more. So, for me it was too late, but for you – limit the amount to a fixed number and save yourself a few bucks. With the knowledge I have now, I would have limited the amount I am going to pay for an inspector to $350.
2) Loan Origination Fees: A loan origination fee is a fee that you pay to the mortgage company to buy a better interest rate. The origination fee is also referred to as “points”. While you want to make sure the deal goes through and the buyer gets a mortgage he can afford, it does not mean that you have to pay for it entirely. So, limit the amount of the loan origination fee to a fixed amount. You can go with a single point (1%), but depending on the house you are selling that can be a big chunk of money. You can limit it to a certain amount and that is what I would have done. In my case I would have limited it to $2,000 and to force the buyer to come up with the difference ($500 in my case).
3) Home Owners Insurance: It is common at least in my home state that the mortgage companies expect you to pre-pay home owners insurance for a year + to fill the escrow account upfront to a certain level. Even though home owners insurance is a buyer related item, it is part of the closing costs. Limit this amount as well. You know how much you paid for your home owners insurance and so you can limit that amount in the closing costs accordingly. Don’t pay for their bad decision going with the most expensive insurance on the block.
These 3 single tips would have saved me roughly $1,500. Fortunately I had enough equity on my old house to – suck it down – and move on (a deal is a deal), but if I would have known before, I would have trusted my own real estate agent less and requested a more detailed contract and not a generic allowance for closing costs.
Author: Christoph Puetz
Article Source: EzineArticles.com
Provided by: Cool mobile gadgets
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