Financing

SELLER’S COST ASSOCIATED WITH FINANCING

For the typical seller there will be costs associated with the buyer’s financing.  Many of these costs are negotiable.  Who pays for these costs of financing will often be determined by the condition of the market and the motivations of the buyer and seller.

There are several methods of financing the purchase of a home.  The basic loan types are FHA, VA, and Conventional.  Each have similar costs to the other.  There are also costs that are unique to each type of financing.  Along with the basic loan types are those loans that are funded by State and Federal subsidized programs.  They also have fees that are unique to their programs.  To keep it simple the following is a guide to a seller’s costs for FHA, VA, and Conventional only.  Keep in mind that the costs are estimates only and that they will vary with time and place.

FHA

  1. Pay off existing loan
  2. Interest on existing loan due at closing: 30 days or less interest (interest on home loans are always paid in arrears).
  3. Reconveyance fee: $55-60 for each payoff
  4. Title Insurance Policy: based on sale price of the home
  5. Escrow fee: $500-600.  Split between buyer and seller
  6. Real Estate Broker’s commission: A percentage of the sale price
  7. Document Preparation fee:$150-300 depending on lender
  8. Discount fee/Points: A percentage of the loan amount
  9. Appraisal fee: $400-450
  10. Property Tax Proration: From January 1st to the date of closing (Most States bill in arrears)
  11. Tax Service fee: $55-85
  12. Wire Fee: $15-50 To pay off loans
  13. Inspection Fee: $50 each
  14. Overnight Express Mail Fee: $15-25.  To pay off loans, etc.

All fees are negotiable between buyer and seller except the tax service fee.

VA

  1. Pay off existing loan
  2. Interest on existing loan due at closing: 30 days or less interest (interest on home loans are always paid in arrears).
  3. Reconveyance fee: $55-60 for each payoff
  4. Title Insurance Policy: based on sale price of the home
  5. Recording fees: $3 per page
  6. Escrow fee: $500-600. Seller pays entire fee.
  7. Real Estate Broker’s commission: A percentage of the sale price.
  8. Document Preparation fee: $150-300 depending on lender.
  9. Discount fee/Points: Percentage of the loan amount.
  10. Appraisal fee: $400-450
  11. Wire fee: $15-50. To pay off loans.
  12. Inspection fee: $50 each
  13. Tax Service fee: $55-85
  14. Property Tax Proration: From January 1st to the date of closing (Most States bill in arrears)
  15. Overnight Express Mail fee: $15-25.  To pay off loans, etc.

Except for the discount fee the fees for a VA are normally not negotiable between buyer and seller.

CONVENTIONAL

  1. Pay off existing loan
  2. Interest on existing loan due at closing: 30 days or less interest (interest on home loans are always paid in arrears).
  3. Reconveyance fee: $55-60 for each payoff
  4. Title Insurance Policy: based on sale price of the home
  5. Escrow fee: $500-600.  Split between buyer and seller
  6. Real Estate Broker’s Commission: A percentage of the sale price
  7. Discount fee/Points: A percentage of the loan amount
  8. Appraisal fee: $400-450
  9. Property Tax Proration: From January 1st to the date of closing (Most States bill in arrears)
  10. Overnight Express Mail fee: $15-25  To pay off loans, etc.
  11. Wire fee: $15-50 To pay off loans

All fees are negotiable between buyer and seller with conventional loans.

When negotiating an offer always ask for specific amounts of those items the buyer is requesting that you pay.  It is possible to raise the selling price to cover some of those costs that the buyer is asking the seller to pay.  However, remember that the house must appraise for at least  the amount of the sales price.