Can closing costs be negotiated by home sellers and home buyers?
By Larry Stoller
The short answer is yes,
closing costs may be negotiated by seller and buyers.
The amount that the seller
is allowed to contribute depends on the type of mortgage loan. The sellers
willingness to pay buyers closing costs may also be based upon current real
estate market conditions.
For example, in a seller’s
market, buyers may have to increase their purchase price if they expect to
receive closing cost assistance.
In a buyer’s market, buyers
may have an advantage in negotiating
closing costs.
Closing costs are expenses
above and beyond the price of the property that sellers and buyers incur that
are paid to title companies, attorneys, lenders, insurance companies, local
government, and other vendors when transferring ownership of a property.
For buyers paying cash,
closing costs may include attorney fees, title search, title insurance, deed
recording and applicable taxes and association fees.
There are additional buyer
fees when using a lender and obtaining a mortgage. They include origination
fee, appraisal fee, flood insurance, credit report, interest on loan until
first payment is due, escrow for taxes
and insurance, lender’s title insurance and mortgage recording.
Other fess may include
homeowner’s insurance, interest rate buy-downs, home warranty, home inspection
and repairs requested and/or required.
Typical seller closing
costs (which are deducted from seller’s
proceeds) may include attorney closing fee, government transfer tax, pro-rated taxes and
association fees, mortgage payoff, liens on property (if any), recording costs
and real estate commissions.
Note 1: While most if not
all closing costs are negotiable, restrictions may apply under certain
circumstances.
Note 2: Money may have to
be brought to the table if the amount of the sellers’ closing costs is more
than the seller’s proceeds.
Note 3: Real estate
commissions are paid by the seller for compensating both the listing agent and
the buyer’s agent.
Experienced and
knowledgeable real estate agents (and real estate attorneys) will be able to
explain to their sellers and buyers what closing costs they will be expected to
pay when selling and/or buying a resale home or building a new home.
What do you think about
association transfer, improvement and administrative fee? Who should pay them?
They are negotiable.
Do you have questions about
negotiating closing costs? Consult your agent, attorney or email me.
Larry Stoller is the Broker-Owner and Realtor with Real Estate
FIVE of the Low Country. Larry@RealEstateFive.com, www.RealEstateFive.com