What are Buyers Closing Costs?
What are Buyers closing costs? When budgeting for a home, keep in mind that the Buyers closing costs are IN ADDITION to their down-payment. The Buyers closing costs will include costs associated with the purchase, exclusive of their down-payment. A buyers down-payment is not considered a Buyers Closing Costs.
Closing costs are a given in a real estate purchase even if the Buyer is paying with Cash. The cash buyer will not have lender’s fees associated with their transaction, since they won’t be financing the purchase.
But, even with a Cash Purchase there will be some modest Buyers’ Closing costs associated with the transaction. Closing cost fees associated with the transactions (escrow fees, recording fees, etc.)
Buyers closing costs are a part of the home purchase. Buyers Closing costs include, but are not limited to:
- Lender fees/points
- Escrow fees
- Pro-rated taxes
- Pro-rated hazard insurance
- Appraisal fees
Buyer’s closing costs CAN be negotiated in a real estate purchase. Buyer’s closing costs CAN be requested in an offer, i.e., that seller contribute. But, it is NOT A GIVEN that Sellers will want to pay all of Buyer’sclosing costs, or agree to pay for some of Buyers’ closing costs. Don’t assume they will.
It Costs Money to Buy a Home
It costs money to buy a home and some of these costs will include: Buyers Closing Costs
Long gone are the days that all a Buyer had to do was breathe on their loan documents and get the key to their home.
Loans are harder to obtain.
Appraisals are tight.
Still . . . “borrowing” money is quite attractive and relatively cheap, with some very inviting interest rates at the present time. However, buyers need to understand one thing:
They will have to spend money to buy a home
- Talk to a Lender: Buyers would do themselves a favor to talk with a LENDER well in advance of making an offer to purchase. It really doesn’t matter when a Buyer is contemplating a purchase . . . if they’re thinking about a home purchase 6 months out . . . now’s a GREAT TIME! If they’ve been raring to go . . . talk to a lender before touring property. Ask me for local lender referrals if you need to.
- Find out what loans are available: Are you going to put down 10% Do you have 20% down-payment There are FHA loans which require 3.5% down payment. VA loans, if a Buyer qualifies, have a Zero-Down. Buyers should find out from a lender what loan program is right for them. What down-payment would work, what the loan will cost them in the form of lender fees. Please talk to me if you have any questions.
- SAVE YOUR MONEY: It really isn’t a bad thing to save money. Start saving and start saving now! If you DO NOT use it in a home purchase that’s great! Money in the bank is always a good thing. But if you plan to buy a home — YOU HAVE GOT TO HAVE MONEY TO DO SO!
Don’t Rely on the Seller Paying Closing Costs
If you’re a Buyer and you’ve heard or read . . .
* Sellers pay Buyers’ closing costs . . .
* It’s typical for Sellers to pay for all of Buyers’ closing costs . . .
* Sellers always pay for all of Buyers’ closing costs . . .
* Sellers have to pay for Buyers’ closing costs . . .
* Buyers closing costs are always paid by the Sellers . . .
These statements are not always true or accurate and should not be relied upon!
Here’s Why: Every term and condition in a real estate purchase contract is NEGOTIABLE between the parties, i.e., Buyers and Sellers. Since closing costs are a term . . .they are NEGOTIABLE.
Closing costs are not the Seller’s Responsibility . . . but they can be a negotiated term in your offer.
Keep in mind the following:
- Sellers may be unwilling, or unable, to negotiate your closing costs. This is particularly true in Short Sales, where a third-party may not approve this term.
- Sellers may be willing to contribute a portion, but not the entirety.
All Things Are Negotiable in a Contract to Purchase
Everything can come to terms: the price, the close date, the earnest money deposit — and the concessions! However, there is nothing in a real estate transaction that is ever “normal” or “typical.” This includes Buyer’s closing costs! They can be negotiated . . . and in many of the transactions, I have negotiated these term successfully . . . but it is not a given.
Nothing in a real estate transaction is a given.