Question Details

Mike Batlin, Other/Just Looking in Rocklin, CA

how much does one figure for closing costs and in this mkt. are bank owned properties willing to share----?

Asked by Mike Batlin, Rocklin, CA Mon Apr 6, 2009

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Hello again Mike,

Also to answer your second question yes REO's (bank owned properties) are willing to help with closing costs. In my experience banks prefer the higher offer price even-though they maybe crediting back a pretty substantial amount for buyer concessions.

You do have to remember that the closing cost money (the seller is crediting to you) is getting taken out of your purchase price still is a cost it just depends on your need to reduce your out of pocket expenses, to negotiate just on price, or a combination of both. It comes down to your situation and what will work best for you in the long run.

Happy house hunting,

1 vote Thank Flag Link Mon Apr 6, 2009
Hello Mike,

Typically you might hear of a 1% figure but I don't like to generalize. It depends on the price of the property you are buying because there are a lot fixed costs associated with buying a property no matter the price (like pest inspections, home inspections, natural hazard disclosure, notary fee's, etc). For example $1,000 of fixed closing costs on a $50,000 purchase is 2% of the purchase price vs. $100,000 purchase price drops to 1%. Some other items included in closing costs can be property tax prorations, loan point buy downs, HOA transfer fees, county and city transfer tax, etc... Basically what I am saying is there are a lot of different variables in closing costs and would have to be looked at in your specific purchase.

I would recommend meeting with your lender and they will give you a good faith estimate (it's required by law) and it breaks down every closing cost associated with your purchase. Also, Mike if your a first time buyer many title/escrow companies have first time buyer discounts (I always get this discount for my first time buyers). Feel free to send me an email if you have any more detailed questions.

Best regards,

1 vote Thank Flag Link Mon Apr 6, 2009
You should be talking with your lender and getting a "Good Faith Estimate" to determine your expected closing costs. From that, you can estimate and ask for a seller concession/subsidy from any seller, banks included. In a multiple offer situation, even if your offer nets the same as the next guys, your offer will be less attractive. (For example, buyer A offers $100K; buyer B (you) offer $103K with $3K of closing costs covered - both are a net of $100K to the seller; but yours is less attractive.) The primary reason is because now the property will have to appraise for $103K, and even though it probably will, it is just one more potential risk to the seller that could cause the transaction to fall apart. Adding to that, people asking for closing costs to be covered are often using low/no money down programs... these types of loans have tougher appraisal processes, often require repairs prior to closing (not attractive when you are selling "as is") and generally indicate a less qualified buyer - all indicate more risks to a seller. Those risks are calculated before an offer is accepted by any seller, especially a bank.

If you have no competition, then it will be easier for you to get that offer to go through. If you have lots of competition, it will be tougher.

Hope this helps. For answers to many common buyer questions read this blog and follow the links (blue) to learn more about each specific type of listing.
0 votes Thank Flag Link Mon Apr 6, 2009
The only way to know whether or not a seller is willing to pay the closing costs is to make an offer requesting for the seller to pay your closing costs.
0 votes Thank Flag Link Mon Apr 6, 2009
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