Home Buying in 95758>Question Details

Jess, Home Buyer in Elk Grove, CA

I bought a house for $368,000, but then on the final closing it said $375,000 how does that happen when I thought I bought it for $368,00?

Asked by Jess, Elk Grove, CA Mon Oct 12, 2009

They said the seller was to pay 3 points but I still had to come up with $$$, I don't understand. Were they trying to get more on commission or have me pay the down as I thought they were paying 3% as they were suppose to? Public record shows the house was sold for $375,000. My loan is for $368 but I had to come up with almost $12,000.

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Almost $12,000?

... My calculator coughed up $12,880 as the minimum FHA down pay on $368K and $13,125 as the minimum down pay on.

If you put down a $1,000 deposit when you wrote the offer. - That would have been part of the $12,880. Leaving you to pay an additional $11,880 at the close of escrow.

More on commission. Probably Not. In residential sales the seller pays the entire commission to both his own agent and to the buyers agent, almost always.

Buyers have other closing costs that buyers must pay OR get someone else to pay them. That sounds lke that is what the 3% from sellers most likely was to pay your loan origination fee, loan processing fee, loan underwriting fee. Any other loan fees. You may have gotten closing statement credit back out of the 3% for your appraisal, credit bureau report and home inspection. The 3% may have paid for some recording fees, some escrow fee, notary fee, Title insurance fee.

You also had to pay for a years insurance policy upfront and put something aside for the property taxes.

Clearly closing costs can be be as high as a down payment.
Many consumers, especially first time buyers, do not realize this.
Even repeat buyers forget how many and how much is put out in fees.
Although house prices have dropped drastically, fees and prepaid expenses such as insurance have not.

Oh,
0 votes Thank Flag Link Mon Oct 12, 2009
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
If you'd gone to closing and had a different amount, then there was a dead stop to the transaction, in my mind. The title company provides a preliminary HUD-1 to be reviewed prior to coming to the closing. If you're at the closing you ought to be able to ask your realtor, or even the title company to show how that number was reflected in your purchase agreement and any addendums to the original offer.

Here's some facts that may apply here:
* A 3% credit most likely refers to assistance on the loan closing costs but doesn't guarantee it covers all of the costs.
* You can't buy a house for no money down. So if your loan was for $368,000, that can't be the amount of the purchase price. Even on an FHA loan, you need to provide 3.5% down, plus there are costs for the purchase transaction, and for the loan transaction (some of it covered by the 3%)
* Commissions are set by the listing agreement between the seller and the listing agent. The buyer's agent is most often compensated through that agreement as well and, in most cases, there are no commissions paid directly from the buyer to the buyer's agent.
* All fees, or credits are listed on the HUD-1, unless you paid for some inspection outside of the escrow. Therefore, your 3% credit would be listed on the HUD-1 statement and easily seen by you, or your agents.

You obviously didn't understand the costs involved in the transaction and for that kind of money it's worth taking the time to sit down and have that explained to you. Sometimes once is not enough.
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Mon Oct 12, 2009
Jess
Particularly in real estate transactions....what does the HUD-1 say?
What did your Realtor tell you?
These are questions that you should ask your Realtor and your lender.
Lenders are supposed to provide you with a Good Faith Estimate (GFE) so you know your closing fund requirements.

Buyers always have closing costs, but it is common to have sellers agree to pay for a portion of them. Your purchase agreement and escrow instructions will specify.
0 votes Thank Flag Link Mon Oct 12, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Jess - It does sound like the difference may be a seller concession for your closing costs. Often times in this market the seller is willing to pay up to 3% towards buyers recurring and non recurring closing costs.

However, I am a bit confused about why you would have thought that the actual sales price was $368,000, as the sales price should have been clearly defined in your purchase agreement. This amount should not change without your written agreement. If in fact, you agreed on the $375,000 and were getting an FHA loan your loan would be close to $368,000. Is it possible that you confused the sales price and the loan amount? FHA loans have a minimum of 3.5% down, but it used to be 3% down. There is a down payment of 3.5% plus there is closing costs of approximately 3% for a buyer. This means to close escrow with an FHA loan without seller concessions you would have to come up with approximately 6% - 7% - or almost $23,000 to close to the escrow.

If truely your purchase agreement stated the price of $368,000 and you got to escrow and the closing statement showed a purchase price of $375,000, there needed to be some questions answered at that point. It is difficult to say what transpried for certain without seeing your purchase agreement and closing statement.

Sincerely,
Lori Mode
Keller Williams Realty
http://www.AllElkGroveHomes.com
(916) 230-0371
0 votes Thank Flag Link Mon Oct 12, 2009
Hi Jess. Based on what you are saying it sounds like your transaction may have had a seller's concession to offset some of your closing costs. In some transactions, the deal may be negotiated "up" to assist the buyer with closing costs. IE: A home is listed for $100k. The buyer needs $3k towards closing, and the seller will not sell for less than $100k. The deal will be written for $103k with a 3% seller's concession. In this type of transaction, the home must appraise for $103k. The example is simplified, but I hope it helps.

Robert Greenblatt
Keller Williams
0 votes Thank Flag Link Mon Oct 12, 2009
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