why are closing costs so much higher on a new built home than on a lived in one of the same price? like 2000

Asked by Cindy, Cuyahoga Falls, OH Sun Aug 16, 2009

difference on a home that is 159,900

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Don French, , Canton, OH
Mon Aug 17, 2009
Cindy, some builders in our area use purchase language that is different from the language in a Board of Realtors purchase contract and they shift some costs - typically real estate taxes and what we think of as "shared fees" - to being the buyers' expense. These additional costs load up the buyer's side of the settlement statement with cost burdens that the builder chooses not to pay. There is nothing that prevents any seller from dictating what closing costs he will or will not pay, but we have industry customs that are standardized into most purchase agreements used for resale homes, so as Realtors we know which costs are normally paid by buyers and which ones by sellers regardless of which brokerage provided the purchase contract. Builders tend to deviate from that, to increase their profitability. Be careful - Some builders have purchase agreements that have a mandatory arbitration clause precluding a buyer from filing a lawsuit for problems with the home or the builder's performance; this may be risky, as buyers then waive their rights to the use of the court system in case of a dispute. I recommend you have a good attorney or buyer's agent help you review contract language and determine if the builder's contract will be acceptable to you; you may want to instead use a Board of Realtors contract because it is standardized and keeps costs shared between the parties. Also, the Board of Realtors form has no "add-on" or "junk" fees charged to buyers and sellers (unlike brokerage contracts created by the the "big" real estate brokerages in our area). If you need further help, my firm does not charge buyers any purchase fees whatsoever, and in fact I rebate 25% of my commission at closing to my clients to assist them with their purchase. Not many brokerages rebate commissions. Thanks!
Web Reference:  http://www.soldbydon.com
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James Gordon…, Agent, Hamilton, OH
Mon Aug 17, 2009
Cindy the closing costs on your loan should br the same. What you will see differance in is the tax proration. New constuction will pay taxes on just the lot as the home has not been assesed for taxes yet. Something else to watch for is if the subdivision has a HOA with a pool. I have seen "joining fees" as much as 1000.00 paid by the first buyer of a property to fund the capital improvements in the HOA.
Web Reference:  http://www.Find1Home.com
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Pat Settar, Agent, Mullica Hill, NJ
Mon Aug 17, 2009
In my area of New Jersey the builder often does not share the "table" fee which is typically split between buyer and seller, that cost is approx. 300.00. Other cost for new construction could be the tax escrow as it is difficult to determine the exact amount so the lender may want to overestimate. The buyer could also be subjected to paying a fee for utility hook up such as public water tie in. Take a closer look at your agreement of sale, all should be noted there; be sure to request a copy of your HUD1 sheet in advance, this way you can try and dispute unknown charges.
Web Reference:  http://www.patsettar.com
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Mark Ryan-Ma…, Agent, Centerville, OH
Sun Aug 16, 2009
Cindy,

There is no reason AT ALL that a new build would be any higher than an existing home... either you are being taken advantage of, or just mistaken on the difference... what amount are you being told the closing costs would be?

Also, some lenders quote things different that others... appraisal, title fees, etc... some quote your escrow fees as part of the costs when they really are not... that kind of thing...

Hope this helps! If you want more help I can even go over your good faith estimate with you.
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