Here’s an article that very few people cover about buying real estate, myself included. I’ve being Writing articles for a year and a half now and I’m yet to cover this topic, even though its something that can cost the buyer thousands of dollars.
So this article is a very long time coming, the thing is, anytime you invest in real estate or buy something for yourself, the cost is never just the down payment you’re putting down, I wish it was that easy.
The realty is there are some substantial cost that seem to just come out of nowhere that if you don’t budget for them, I promise you’ll be caught off guard anytime you’re buying something, so I’m going to be covering just about every unexpected hidden cost that most people aren’t mentioning to you, well until the bill comes due and you have to pay it.
So first off, let’s sat you’ve being looking at properties and writing offers, sellers are denying them even though they should have being taking your offer, and then finally you get accepted, what’s the first cost you might have to incur and that is:
Inspections: This is the point where you have to inspect the property for any defects whether or not you want to move forward the deal. Typically you’re going to be doing a general inspections, sewer inspection, roof inspections.

I’ve seen them Even get more advanced with this when you’re done like the slope analysis, geological inspections, I’ve seem the radar gas inspections. Depending on the age and size and type of products, property as inspections can generally run you from $300 at a very low end all the way to $3000.

Depending on how involved you want to get with the process, even now this is an out of pocket cost for the buyer , I’ve generally found that whatever money you spend on inspections can be renegotiated off the purchase price. After you’ve found repairs or problems with the property so, for example let’s say your buying a $1500,000 home and you just spent $2,000 on inspections, in about every single scenario, you can find it least $2000 with a repairs or damage or something that is wrong with the property at then which point you can go to the seller and say you want your money back off your price and credit towards my closing cost.

That way, your inspections aren’t really out of pocket cost because you can usually just renegotiate with the seller after words and what ends up happening more commonly is that you spend $2000 on a inspections and 2000 worth of repairs, so I generally find that what ever money you spend on inspections, you can get back plus in repairs and the credits from the seller.
Now of course, sometimes the seller is going to get overly confident and they’re not going to budge in their price or maybe they even have a higher offer the. The movers and they don’t what to give you any sort of credit.

So it really depends on the seller or any type of property or how you’re buying it, there are a lot of factors that go into it, just so you know the out of pocket cost for you is going to be approximately that much.
Okay so the next thing you’ll need when doing your inspections is what’s called
Appraisal: Anytime you’re getting a loan from the bank, they’re going to be doing an appraisal at home to make sure, its actually worth what you’re buying it for, otherwise there’s nothing stopping you from buying a $580,000 home and writing a purchase price for a million dollars

And let’s say the home burns down and you stop making payments, and then the back realized the home was never with the home to begin with, and they just lost a ton of money. Appraisal are usually done with a few days or a week after, you get your offer accepted and typically run anywhere from like 400bucks to a $1000.

Depending on the type of property, if its multi-family, Joe large it’s the game so there a lot of factors that go into this but genuinely, that’s the range that you could expect.
Now if you a really good bank client, if you have a great credit card score, it you have a lot of money with the bank, if you have a good relationship with the bank, every now and then they would waive the appraisal fee, it was done for me w few times, but it isn’t necessarily the norm
but if they don’t do thus is approximately how much this is going to cost you.

Loan fees: Now while we’re on the topic of getting a loan, banks love to charge you fees, in my recent closing , I paid $950 for appraisals and to I paid in additional $150 that had the appraisal rushed because it was on a quick turn constraints to get this end.

There’s a lot of banks out there that can charge from a half percent to a full percent of loan origination fees that the bank would charge you, but it depends on the bank your relationship with it and how much money you have within it, there’s are a lot of things that play into it and it also depends if you shop your offer around.

So this is what I typically do anytime I get a loan, I have a bank number 1 and I have them give me an offer for whatever loan I want, I’ll take that then to bank 2, I have them beat that offer once I get that in writing in go back to bank number 1 and I say can you beat that offer, they always will and the worst case they’ll match but let’s assume they beat it, then I go to bank no 3 and I keep day this until I get the best possible rate so they can post march that offer but if you hiring in y and of money.
Then we’ll start to cover your closing cost, so we can start covering these fees, then we’ll throw in thus and we start drawing in parts at this point, so you can continue playing these banks back and forth.

Over the period of like a week, to them get the best possible deal on your loan, what about my home in covert aly a little bit over 2 years ago, the lender paid for everything I had no fees I had a 3.75 percent loan or 30 years later and they gave me a 2.00 dollar credit back after closing.
There are certain things you could do with the banks that they will give you preferential treatment, to go whenever they want to do.

So make sure anytime you’re getting a loan, try to shop it around, try to get the lowest free you can try to get the best rate you can because banks have a little bit of padding anytime , they give you quota it’s the money, upselling a little things, so just make sure you shop your loan around.

Insurance: this is one of the things that he sees require for you to close is that you have to have your insurance paid for, and this is to prevent you from closing on the property, there’s no insurance on it, the home is no more and them all or a sudden it’s not insured and then everyone loses money, so you must have insurance when you close and typically you’re prepared the premium for like 6-12 months ahead of time and this is factual into your closing cost, do you see my insurance here was 12,00 which isn’t really bad bit this is offered an expense that buyers don’t even think of and so they’re actually giving me insurance and they quote it out and get that paid for at the time of closing.
So make sure that is not something that you don’t expect to pay.

Escrow fees: Now some states might have lawyers instead on escrow companies but here in California we have escrow companies, this is really just an intermediary totally neutral third party to the transactions that just make sure both parties fairly comply with the contract.

And if course like any good service out there they have a fee, now here in California most escrow companies typically charge a base fee plus $3000 of purchase price, so for a $500,000 home the fees could range from like a thousand dollars to 2000 dollars depending on the type of escrow company and services that you’re getting but like I said remember everything is negotiable.
If you read this entire article and forget everything afterwards, just take away one thing from this article, everything is negotiable you can negotiate with th4 escrow company t9 charge you the buyer a lower fee, ask them for a dollar per thousand maybe try to settle in the middle, a dollar per 50 per thousand or a dollar 75, negotiate with th3 escrow company and you can get it just by asking.

Sometimes they’ll say no they don’t negotiate but you lose nothing just by asking and if they give you esentiall6 it’s just free money just for asking.

Title fees: This insures that the property is being deduced free of any leads or incumbrancer and that you can actually take legal full rights of that property without having to worry about and these services obviously don’t come without a fee if can range from 500 -800. Depending on the company. Your relationships with them, these are some of the factors That play into that but for the average 5000, 000 have you can expect it pay around that.

Miscellaneous fees: that tend to crop out of nowhere, so let’s just add this up and say its on average 500 dollars random miscellaneous little thing that just adds up.

Sometimes not all the times I don’t want to make the general assumptions that this happens to everybody but sometimes escrow company would charge you. Just generic fees as part of the service whether or not you’re actuality end up using them, so if you don’t end up using them just itemize each part that you don’t do end then ask the escrow company for a refund again not all escrow companies do that but I see a. Few things tend to skip though the tracks as just a Base line services offer again, whether or not, your actually use those items so now you’re going to see here we have quite the wide range in expense,
Now I’m taking a typical home in California average price of 500,000 dollars but still we can all agree that 14,p00 of closing cost is extremely expensive but keep in mind it really depends on the type of loans and lenses you use your credit score,

Thus also depends how well you were able to negotiate this Cost ahead of time and also how well you shopped your loan around whether or not you can get rid of those fee I always recommend you go that because at the very least even if you suck at negotiating you should be able to get something back from those amounts.
And one last thing I want to mention that can save you a lot of money anytime you’re buying something and it’s to negotiate with the seller during the inspections period to cover your closing cost now o typically do this after I get my offer accepted and after I’ve done my inspection but Before I remove my inspections contingency.
Whatever repairs or damages are down in the idea I would ask the seller to preferably issue a credit card and it’s called towards non-recurring closing cost, this means that it you have Les say a 5,000 closing cost associated with your Deal.
You can ask the seller to give you a credit for this and that way you don’t have to come out of the pocket for it. But you have to be careful for this because in California the seller can only credit you up. Till the amount it non-recurring closing, which means they only can credit you fixed one time cost if you’re buying they cost credit you for like the several years of property taxes, in the future they can credit you the insurance payment for the next few years so whatever the closing cost is going to be, I generally recommend taking a credit up to that amount and then you do is issued as a reduction of the purchase price.

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