I have a single family investment property I may possibly be able to sell to the tenant. My family used to live in the property and when we upgraded it wasn't practical to sell at the time and it has been a break even as a rental. I want enough out of the property to pay off the mortgage and closing costs and this would give a modest below market savings to the tenant if we avoid Realtor commissions.
I have heard that I should allow 7% of the selling price to pay closing costs, does this sound reasonable accurate so I avoid bringing money to the table just to sell it?
Thanks for any advice on this.
If you do not have to pay any agent commissions then being conservative at 3% should be more than enough to cover your closing cost. Now if you if provide any seller concessions (i.ethe. help them with their closing cost), just add that amount to the 3% for yours and you will be in a good place. More than likely entire process will cost you less. Also, which title & escrow company you choose plays a factor into the cost. I use Ticor Title out of University Place, as they give investors discounted rates on closings through them.
Doesn't the seller have to pay the excise taxes? I appreciate your referral to Ticor but I am not sure if they would consider an investor for that purpose as I mostly buy and hold out of state and I am not constantly creating churn to make them a profit.
@Mitch Dowler yes the seller has to pay excise tax in WA. its 1.78%. If you use a real estate agent you are looking at about 6% total. 3% for sellers agent and 3% for buyers agent. Then there is some title/escrow. I usually estimate about 8% for total closing costs when selling.
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