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Which costs are potentially negotiable in closing costs

Asked by Trulia, San Francisco, CA Sat Mar 3, 2012

Are there negotiable and non-negotiable closing costs?

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In a technical term, everything negotiable in a real estate transaction, however there are customary practices as to what the seller pays in a transaction and what a buyer pays when buying a house. These customary practices may vary from one county to another. Below are most of the items in a real estate transaction and how they are normally divided in ALAMEDA or CONTRA COSTA COUNTIES:

SELLER'S CLOSING COST:

 Both broker’s compensation
 Natural Hazard Disclosure Report
 County Transfer Tax
 Pre-inspections fees, if done in advance

BUYER'S CLOSING COST:
:
 Loan Fees including origination fee if any, loan processing, underwriting and funding fees, flood and tax search fees, credit report fee
 Inspection Fees
 Appraisal Fees
 Escrow Fees
 Owner and Lender’s Title Fees
 Misc fees such as recording fee and notary fee

Other costs such as HOA documents fees, HOA transfer fees and home warranty protection policy can be negotiated to be either principal’s expenses. Generally properties are sold “AS IS” in their current condition, so any potential repair costs may or may not a negotiable item during the course of a real estate transaction. A buyer with a limited fund can very often negotiate upfront and request seller to pay for his/her closing cost.

Feel free to contact me for details on the customary practices of the other Bay Area counties.
0 votes Thank Flag Link Sat Mar 3, 2012
Who pays for what costs in a transaction, including those normally referred to as closing costs, are set out in the standard CAR Residential Purchse Agreement ... and can be stipulated as a buyer, seller, or both buyer and seller, on an individual basis.There are customary costs assigned to both buyer and seller depending on the specific community, but these are strictly customs and have little legal weight. A few jurisdictions do mandate some sales costs (usually inspections and mandated updates) to be completed prior to the close of escrow, which usually means they fall into the sellers side of the ledger, but even then there are circumstances, like short sales, where it may fall to the buyer to pay such costs.

the challenge occurs when the agreement is not completely filled out and resulting headache of dealing with "customary" vs "legal" comes up in later negotiations... the best position for a buyer to take is to think through the process and stipulate what you will pay for and what you want the seller to pay for as part of the offer to purchase. Do take into account that these days with nervous lenders any inspection, report, or work request that is in the purchase agreement will probably become an item required by the buyers lender.

Steve Curtis
Broker / Owner
Windermere
0 votes Thank Flag Link Sat Mar 3, 2012
Great question! Essentially most of the closing costs are negotiable with the seller. If representing a buyer I ask their lender to compute the closing costs associated with a purchase price and then discuss whether my buyer wants to ask for all, part or none of the closing costs in the form of a credit. This of course is based on my buyer needing a loan. There are different strategies to employ with each offer and different negotiating styles with each buyer.

Hope this helps,
Suzanne Looker
0 votes Thank Flag Link Sat Mar 3, 2012
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