Last Minute Problem

Some closings go as smoothly as silk, others can be quite challenging - todays is working its way towards one of the challenging ones. We are scheduled to close on a property at noon today with the final walkthrough being conducted this morning at 9:30. The buyer totally "freaked" when she walked through as the owner had spackled over nail holes where pictures had been removed but had left white spots about 6" in diameter all over the walls (all were painted a variety of colors). The buyer has movers at her home ready (and being paid by the hour).

So, what to do? The property needs to be delivered in "substantially the same condition as of the date of the contract and broom clean". Obviously, there were not white circles of spackle all over the walls. In this case, the buyer has a legitimate complaint. The seller will not make any concession, he honestly feels that he was doing the buyer a favor above and beyond what was called for. The owner is now on his way back to the house to remove the spackle - water soluable according to him and the buyer is waiting to do a second walk through - while the movers are waiting around by the hour.

We're off to the races, I'll let you know what happens..........

Anatomy of the cost of Buying & Selling

It's shaping up to be a quiet day in the Real Estate world. First thing up this morning is a review of a HUD-1 statement for a closing later on today. A HUD-1? Yes, that's a form required by law (HUD stands for Housing and Urban Development) that is basically a statement of what all the charges are and where the money goes (and comes from). Both buyer and seller get this statement at the closing.



The purchase price of this home is $490,000 - the amount of the new loan is $392,000, so the purchaser must bring $98,000 to the closing? NO, the buyer must bring $101,758.30 - there are $13,758.30 in closing costs to the buyer, less a $10,000 credit from the seller according to the negotiated contract. This is obviously the sign of a buyers market - very few of the contracts we see don't have some sort of seller credit.



The selling price of $490,000 less the mortgage payoff of $319,048.56 gives the seller $170,951.44. No, actually it gives the seller $124,425.97 - it cost the seller $46,525.47 to sell this house. The 9.47% of the purchase price it cost the seller could have been worse - the seller is a licensed real estate agent and therefore paid no commission on the selling side!



None of these figures take into consideration that there was also a $4,096.40 fee paid by the mortgage company to the mortgage broker - that was paid outside of the closing - a small amount considering the amount of interest the borrower will pay over the life of the loan.



So, let's break this down a little:



On the Buyer side:

$295 - Administrative Fee to Real Estate Company

$325 - Appraisal Fee

$20 - Credit Report

$525 - Commitment Fee to Mortgage Company

$79 - Tax Service Fee

$18 - Flood Certification

$7.50 - Document Delivery Fee

$345 - Processing Fee to Mortgage Broker

$13.30 - Verification of Employment Fee to Mortgage Broker

$4.95 - Mers Fee to Mortgage Company (so they can track the loan if it sells)

$224.76 - Insurance for 3 months

$1,203 - County Taxes for 3 months

$2,458.73 - Reimburse Seller for county Taxes prepaid through 7/1/08

$313.06 - Interest for 3 days (from closing to end of month)

$195 - Settlement Fees to Settlement Agent

$140 - Title Search

$30 - Title Insurance Binder

$25 - Notary Fees

$909 - Lender Title Insurance

$1,030 - Owner Title Insurance

$75 - Courier / Copy Charges

$4 - Wire Fee

$80 - Recording Fees

$2,450 - City/County Tax

$1,225 - State Transfer Tax

$1,518 - State Recordation Tax

$180 - Survey

$65 - Termite Inspection



On to the Seller's Side of the Transaction:

$7,804.30 - State Withholding Tax

$300 - Water Escrow pending final bill

$14,700 - Commission to Buyer's Agent

$5,000 - Bonus to Buyer's Agent

$5,052.90 - 2007/2008 RE Taxes

$195 - Settlement Company Fees

$15 - Notary Fees

$125 - Filing of State Withholding

$20 - Courier / Copy Charges

$125 - Payoff Service Fee

$4 - Wire Fee

$2,450 - City/County Tax

$1,225 - State Transfer Tax

$1,518 - State Recordation Tax

$450 - Homeowners Warranty

Any Questions or Comments? This is what it cost both the buyer and the seller to transfer ownership of this house!

BE A SAVVY BUYER OR SELLER - MAKE SURE YOU KNOW WHAT THESE COSTS ARE AND MAKE SURE YOU QUESTION EACH AND EVERY ONE!

More Later Today!