How are closing costs customarily split between the investors and the bank during a closing? Fees may include Doc Stamps, Abstract Title, Title to Close, Recording, and other miscellaneous closing fees. Naturally, I'd like the bank to pay as much of these fees as possible, but also don't wish to ask the bank to pay fees they customarily do not pay. Also, can one ask the bank to pay for building inspections such as a termite inspections?
I plan to wholesale properties and will need double closings. As the wholesaler, which fees should I expect the bank, myself, and the end buyer to pay? Is there a web site or other available documentation that breaks these fees down? Thanks, Dan.
Every deal can be different. There likely is a market practice in your area. In some locations fees are split of the fee goes to the one who is getting the benefit (buyer's title insurance normally being paid for by the buyer).
The bank looks more to the net cash they will received after all costs. They might expect to have to pay certain fees but they will still be more interested in the net number. Your profit should largely be estimated the same way. It does not matter who pays a specific fee half as much as what your profit is.
Talk to some agents or a title company escrow officer. Get a sample HUD-1 and have them explain what is customary. That will provide you with a good sense of where the edges are.
Thank you John. I appreciate your insight on this. Dan.
basically the buyer is paying all the closing cost, because if the bank doesn't get their net, there will be no deal.
I recently spoke with Washington Mutual about a short sale, and they stated that the sale must be at FMV and they usually pay Realtor commissions of 3% for one Realtor or 5% for two, title insurance, back taxes, a basic escrow fee and recording fees. They stated that they allow no seller contributions to buyers or other payouts. They all seem to have different policies so it is important to ask.
FMV is all a matter of opinion though. Always keep that in mind, and I have got WAMU to pay 5% on a single realtor many times. It all depends on the relationship you can build and how well you present your case.
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