Closing Costs ImageInexperienced real estate buyers may assume that the listed price of a home is all they would have to pay in order to acquire the property.

This is far from true, although that is the amount the seller would like to make from the deal. Before the sale can be completed entirely, there are closing costs and taxes that need to be paid.

Closing Costs Responsibility

These are a part of every real estate transaction, but the payment responsibility differs between states. For example, some states require sellers to pay these fees and other states allow for negotiation between the two parties.

Real estate agents are familiar with closing costs and how they work, but if you are working on a deal on your own, you’ll need to understand them as well. If you are purchasing a home from an MLS listing, you may be able to let the real estate agent negotiate this figure for you, even if you found the home on your own.

Escrow Payments and Fees

If the money paid for the home is required to go through the escrow process, this may also have a fee attached. Find out how much this is going to be so you can plan ahead with your budget.

One method for handling all these fees and taxes is to plan for them in your bank loan. Then, you won’t have to pay them out of your own pocket and you’ll be able to purchase the home you want.

Attorney Fees and Title Insurance

Additional fees may also come up in the form of attorney fees and title insurance. This insurance assures both parties that there are no liens on the property or owners that are not aware of the potential sale. It also insures the property for its full value if something were to occur.

County Recording Fees

When deeds need to be transferred, the county where the property is located may apply a recording fee. This documents exactly who the property owner is and when they acquired it.

In order to officially document this, the county charges a fee to the home buyer. There is also a transfer tax paid to the local county, based on the sale price of the real estate and their pre-determined percentage.

Before you get a bank loan for any piece of real estate, make sure you’re aware of these additional fees. If you don’t, you may be surprised by the additional financial requirements that come along. Instead, become an informed consumer and your real estate purchase will go much smoother.

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This is filed under Home Buying.

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