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Closing Costs, How Not to Pay Any!

Aug 17, 2007
Closing costs? You mean I have to pay MORE money than I offered. Yes indeed, most of the time. Closing costs are all those fees, and impounds paid at C.O.E., close of escrow that are not part of the purchase price of the house. Fees can vary somewhat, so we can't give you solid numbers here. But if you are buying the home yourself, without the help of an agent who found the home on the Phoenix MLS, or you are using an agent you can and should negotiate closing costs. Almost every item is negotiable. But once you have signed that Offer to Purchase agreement, unless you can get the other party to sign an addendum, all costs and to whom, will be paid as designated in the agreement.

By C.O.E. you should have determined that everyone on both sides of the transaction has performed the way they were obligated to perform. If you have any disagreements, make sure they are brought up and satisfied prior to your signing any further documents.

What are some of the typical items grouped as Closing Costs?

Agent's commission: This is typically 3-7% of the sales price, and usually, but not always, paid by the seller. If you were the seller, you already negotiated this with the Listing Broker's agent.

* Taxes: The seller must pay up to the day of closing, the buyer begins paying them as of the day of closing. These will be prorated for each party at closing.
* Homeowner's Insurance: If the lender requires that they pay this, they will ask for six months or a year's premium at C.O.E. Other times, the lender will allow the buyer to pay this on his own. Speak to your loan officer if you are borrowing money. If you are paying cash, this will not be a line item.
* Assessments and Liens: All of these must be paid at C.O.E. in order for the Title company to issue what is called a "clear" title. Usually the seller would pay all of these.
* Escrow fees: These are the fees charged by the escrow company for its services. Typically, these are split equally by buyer and seller but remember, everything is negotiable.
* Title Insurance: The buyer almost always pays for the Title Insurance that protects the lender. The seller usually pays for the Title Insurance that covers the new owner's interests in the property.
* Inspection Fees: Some home inspectors will allow the buyer to pay this fee at C.O.E. Others want this paid at the time of inspection.
* Pest Inspection: Again, either paid at the time of inspection or at C.O.E.
* Deed Recording Fees: The Fee usually the county charges to record the new deed and release the old one.
* Loan Fee: These are all of the fees your lender is charging you to give you a loan.
* Home Warranty Fees: If a home warranty is ordered, C.O.E. is when it is initially paid, usually.
* Document Preparation Fees: This is a fee usually charged by the Lender.

Others that may come up, depending on the circumstances.

Secret. If you don't want to pay any fees, negotiate them in the Purchase Contract. One common way to accomplish most of this is to raise the price of your offer above what you are willing to pay for the real estate, by an amount equal to the closing fees, up to a limit possibly imposed by your lender. Then ask the seller to pay all the fees. Any good Phoenix real estate will know how to do this.
About the Author
Philip Rosenberg
http://www.philsellsaz.com
Realty Experts, Inc
480-473-4532
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