Jim Valentine on Real Estate
Buying or selling real estate, there will be closing costs. “Closing costs” sounds simple enough in itself, but it can become a significant factor depending on the transaction and how you are being charged.
One mis-checked box in the sales agreement can result in a cost of $350 or more. Be sure to look at the details of your offer and not just the price and closing date. There are money clauses beyond the price.
One of the bigger costs you’ll encounter is title insurance. There are two types, owner’s policy and lender’s policy. In Northern Nevada, most offers call for the seller to pay for the owner’s and the buyer pay for the lender’s policy, if they are getting a loan.
Occasionally the owner’s is split equally between the parties, a substantial amount to make note of when making/assessing the offer. Escrow fees are almost always paid equally by the parties unless an offer or counter calls for one party to pay all closing costs.
This is done once in a while to compete with other offers, or otherwise sweeten the deal. The Real Property Transfer Tax, RPTT, is based on the sales price.
This is a checked box in most forms. On a $500,000 property the total RPTT paid is $1,722, or $861 per side when split. Buyers will have costs for pest inspection, physical inspection, water quality test if on a well, septic inspection, appraisal, etc.
Sellers can experience septic pumping costs, survey, and more including repairs that become necessary as a result of inspections. Note carefully who is paying for what as the totals can add up in a hurry.
These are traditional ways to assign costs, but everything is negotiable. Loan costs are charged by your lender and can vary greatly. When you shop your loan be sure to compare apples to apples, look at all the costs associated with securing and funding the loan.
Loan costs can include appraisal, origination fee, points, credit report, flood report and more. Lenders differ not just by their interest rates and quality of service provided, but by total closing costs charged as well.
It is more subtle than interest rates but can offset a reduced interest rate that a borrower may be focused on. There can be other costs in specific transactions that aren’t readily apparent. If you are buying a property with water rights, there is a fee to transfer the water rights at the Division of Water Resources.
If you pull money from a retirement account, there may be a fee or tax consequence involved. Some transactions involve attorney or CPA review and/or input. If you buy in a HOA there are transfer fees, set up fees, etc.
The prorated costs of real property tax, insurance, assessments whether HOA, community, etc., and the hard costs of recording fees, doc prep, wiring, overnight delivery, etc. can add up. If you haven’t bought or sold a home in a while it is important that you get an estimate of closing costs up front when you write, or are considering an offer, so you can assess your total expenditures or net proceeds.
It can help differentiate between multiple offers as different transactions can incur or call for different closing costs for the parties. Costs are incidental to the whole, but you should be aware of them all as you proceed so you have a good perspective of the finances of the transaction in their entirety.
It is easy to overlook the closing costs when focusing on negotiations, but it is a good idea to have a handle on the overall. The proverbial devil is in the details, get them.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, License No. BS-03481, RE/MAX Gold Carson Valley 775-781-3704. dpwtigers@hotmail.com