What would be the estimated cost at closing on a cash deal for the buyer.?

Asked by Dunning Hill, Grayslake, IL Thu Sep 23, 2010

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John Walin’s answer
John Walin, Agent, Libertyville, IL
Mon Jan 24, 2011
Hi Dunning

In my own experience with cash buyers, you pay for the buyer portion of the title policy and the seller pays for the transfer taxes unless the village has stipulated that the buyer pays transfer points. In Lake Forest and Lincolnshire for example it is quite sizable and can be calculated and negotiated into the net price of sale. Paying cash on a bank owned, REO usually has other expenses too. Seller doesn't pay for staked survey and often if there is an association the buyer is on the hook for the back due HOA. If you have a cash deal with no lender involved it still is advisable to get the buyer title policy and pay for a staked survey. Always use an attorney to make sure the prorations are right and the deed gets recorded properly. In Illinois we are not an escrow closing state so pay for the attorney services to make sure you are represented legally at the closing table. As agents, we can't give legal advice and if something shows up on the title or a neighbor shed goes into your yard onto easement you have legal counsel.

As to the rationale to go in with a cash offer, it is hard to justify tying up cash with mortgage money so cheap. REO sellers would rather sell for more money assuming the appraisal comes out right, than close faster to an investor. Plus Freddie Mac and Fannie Mae give preference for owner occupied homes so if you are an investor, they would rather sell to a family to use as primary residence than an investor. The neighborhood stabilzation program is to get home buyers in houses and not to sell at a discount faster to an investor class buyer to looking to flip the house. Cash means you can close in one to two weeks with title work hurdles. The REO bank would rather close in 2 months for a higher price to a family that will stabilize the community.

Best of luck, fell free to call me if you care to discuss further.

847 276-0120
0 votes
Jim Starwalt, Agent, Grayslake, IL
Mon Sep 27, 2010
Dunning,
With a cash deal your costs are minimum. Survey, if you want one (300-400) attorney, if you want one ($400), a few misc. Title expenses. So depending on the property, $1,000 to $2,000.
As John stated Fannie Mae prefers owner occupants, however I have seen a lot of banks favoring cash deals over financed deals, because there is no appraisal issues to deal with.
Good luck,
Jim Starwalt
224-627-7581
0 votes
Jeffrey Kropp, Agent, Chicago, IL
Fri Sep 24, 2010
Not much, seller usually pays for title insurance policy and survey and county and state transfer taxes.
So unless the town has a buyer tax (rare except for Chicago) you pay your own attorney and some small miscellaneous fees, I would guess a couple grand would do it.
0 votes
John Juarez, Agent, Fremont, CA
Thu Sep 23, 2010
The reason that the title company normally needs proof of insurance is because the lender requires that there be insurance in place before they will fund the loan. The lender wants to be sure that the collateral for the loan (the house) is insured for their protection.

If you are paying cash, there is no lender, so you do not have to prove to anyone that you have insurance.

You do need insurance! It is for your protection. If you pay cash for this house, close escrow tomorrow and it burns down the next day you will wish that you had insured the house. If the property that you are buying is an empty, unimproved lot you still need insurance to protect your liability in case a trespasser falls and hurts themselves on you property. Yeah. Dumb, but true.

Check with a good local insurance agent and get your insurance policy in place before your close escrow.
0 votes
Justin Carmo…, Agent, Kenosha, WI
Thu Sep 23, 2010
Hard to say...many things factor into it. Purchase price, town/village of the property, etc...
If you're not using a Realtor in the transaction, be sure to have a real estate attorney then at least on your side to help you with these things. If you're purchasing, it's in your best interests to use a Realtor, as it won't cost you anything out of pocket for their services and assistance. A buyer's Realtor is paid from the seller in most cases.
http://www.CarmodyRealty.com
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