Hi, I'm trying to figure out what to expect in terms of closing costs as a percentage of purchase price for cash purchases on homes priced under $30,000.
I know I'll save on credit report fees, loan origination, and title insurance.
How about the realtor fee? For such a cheap home bought off the MLS, should I expect to pay more than 3/6%?
You'll be hard pressed in getting loans on cheap properties, minimum loan amounts are 50K in secondary lending and portfolio loans in many banks. You loan origination fee will usually have a minimum amount, like 500 as if it were 1 point on a 50K loan.
Closing costs are variable and fixed.
Title coverage is based on the sale price, settlement costs are fixed generally as it doesn't matter what the property value is. Loan costs are variable to points, PMI, but origination fees can be fixed or variable as well as processing fees, document prep etc.
Before you start saying you're going for cheaper housing, better check with lenders on the availability of funds and what costs are. Costs, per thousand borrowed are generally higher. Call title companies and ask what fees are customary and who pays them, that will be different from one area to another, need to know local customs.
Some (many) Realtors won't deal with cheap houses, if they do they may charge 10% on the sale price instead of the customary 6%, getting 6% and splitting that between two Realtors, buying and listing, on a 30K sale won't make a car payments and buy food after taxes. :)
Realtor fee can be any amount. The standard for the industry is 5-6% of the purchase price. The realtor fees are likely not going to change much based on a lower price because the amount of work needed to sell the property does not change. The good news is if you are buying a house you likely do not have to pay realtor fees unless stated other wise.
Realtor fees, paid by the seller usually, can be higher, as a percentage on lower priced properties. As Shawn said, the process on a $30k house is the same as a $300k house. I do a $3500 minimum. And as Bill said, no traditional financing usually under $50k.
I also do a $3,500 minimum.
Did no one read the part about the OP talking about it being a cash purchase?
From what I can tell (not based on experience, just observation and education) the commission on a MLS. I've searched alot of homes on MLS in the 30-50k, and the compensation is outlined as either a percentage (usually 2.5-3% each) or a flat amount.
As the BUYER, you won't typically pay your agents commission anyway. If you did have to pay your agents commission, you would pay them what is outlined in the buyers agent agreement you signed when they locked you down as their customer. You can refer to that to see what you will be expected to compensate your agent in the event that the seller doesn't pay them.
That said, I'm expecting - again based on my own research - the buyers closing costs on a 30k cash purchase to be 1-2k.
Yes, I saw he said cash purchase, but he also mentioned credit report fees and loan origination? To clarify the minimum commission, on the buy side the minimum would be $1750, so if $900 is offered on the buy side, my buyer would be responsible for an additional $850. Today, we're doing on inspections on a $720k house for my buyers. I arranged and set up the home inspector, generator inspector, appraiser, septic pump out and inspection, and a flooring/repair guy. I'd have to do the same (probably no generator inspection though) on a $30 k deal, after we had found it, viewed it along with all the other potential properties, offers back and forth, set up financing, deal withe title co. until closing, etc. It makes no sense doing that for a $500 net commission.
My apologies, by mentioning I'll be saving on credit report and loan origination fees, I meant I'll save by not having to incur them. Hope that makes more sense.
My misunderstanding, but do Not buy without title insurance.
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