Closing costs when paying cash

[Tailgate]

Planning downsize and selling current home in Texas, moving to a nearby city and buying a newly built home for cash. Am I correct with following assumptions?

Selling- only fee as seller will be realtor commission...

Buying- closing costs with loans seem to be between 2% and 5% of purchase price... what are they when all of the lender fees, credit reports, etc are not an issue? Is there title insurance on a newly built home?

Taxes- in Texas, there is no real estate transfer tax, so other than prop taxes, there are no taxes on the transaction ..correct?

 

[Big_Hitter]

you don't want an inspection or title insurance (not sure if the seller pays for that in TX can't remember)


I'd definitely get it inspected, even if it's new

 

[aja8888]

Planning downsize and selling current home in Texas, moving to a nearby city and buying a newly built home for cash. Am I correct with following assumptions?

Selling- only fee as seller will be realtor commission...

Buying- closing costs with loans seem to be between 2% and 5% of purchase price... what are they when all of the lender fees, credit reports, etc are not an issue? Is there title insurance on a newly built home?

Taxes- in Texas, there is no real estate transfer tax, so other than prop taxes, there are no taxes on the transaction ..correct?

In selling: You may owe unpaid taxes for the partial year that will be paid at closing. You may owe doc fees (small). You may have to pay for the title policy for the new buyer. Don't forget to check and see if you have utility deposits coming back after you close the accounts.

Buying: New home should/will have a title policy. Builder may have unpaid liens. Be careful here. Pay for a home inspection. Builders are very sloppy. You may have to pay utility deposits.

 

[Big_Hitter]

looking at my hud1 from last year (as a buyer)


appraisal fee
credit report
wire fee
edoc fee
erecording fee
closing fee
flood cert fee
title insurance
prorated taxes


some of those were chump change except for the last two - you won't need some of them since you are paying cash


inspection was done outside of closing and during the option period - I'd definitely have an option on the contract


make sure you check for fault lines..

 

[JoeWras]

It depends on the state, and customs of the region.

 

[Texas Proud]

As others have mentioned..... most of the fees at closing are there even if you pay by cash... it is easier to get done and faster if you want, but the fees to buy and transfer a property are real...

From a tax perspective, the seller is supposed to pay their portion... but you have to pay the bill when it comes due at the end of the year...

 

[ExFlyBoy5]

Planning downsize and selling current home in Texas, moving to a nearby city and buying a newly built home for cash. Am I correct with following assumptions?

Selling- only fee as seller will be realtor commission...

Buying- closing costs with loans seem to be between 2% and 5% of purchase price... what are they when all of the lender fees, credit reports, etc are not an issue? Is there title insurance on a newly built home?

Taxes- in Texas, there is no real estate transfer tax, so other than prop taxes, there are no taxes on the transaction ..correct?

Selling side will depend. If the buyer is VA or FHA, then there are quite a few non-allowables (meaning the seller has to eat much of the closing costs)...I support the troops (I was one for many years), but if I can't find a cash buyer, I will always pick a buyer who is doing conventional over VA or FHA to reduce the closing costs.

As a buyer...it's really up to you. You can have title insurance (recommended!!! And as a bonus, without the coverage for the lender, it's much cheaper) or not. There is usually some sort of tax due (depends on the state). Here in Georgia, there is 1/10% tax on the sales price and if you take a mortgage, an additional tax (can't remember the %, though).
Buying with cash is king. If you are comfortable with simple deeds (two page 'fee simple' in my case), it costs very, very little if you leave the closing attorney (or title company) out of it.

 

[Texas Proud]

Selling side will depend. If the buyer is VA or FHA, then there are quite a few non-allowables (meaning the seller has to eat much of the closing costs)...I support the troops (I was one for many years), but if I can't find a cash buyer, I will always pick a buyer who is doing conventional over VA or FHA to reduce the closing costs.

As a buyer...it's really up to you. You can have title insurance (recommended!!! And as a bonus, without the coverage for the lender, it's much cheaper) or not. There is usually some sort of tax due (depends on the state). Here in Georgia, there is 1/10% tax on the sales price and if you take a mortgage, an additional tax (can't remember the %, though).
Buying with cash is king. If you are comfortable with simple deeds (two page 'fee simple' in my case), it costs very, very little if you leave the closing attorney (or title company) out of it.

That is true.... if you are as the buyer and the seller agree on all terms, you actually do not have to have any closing costs.... but you better know RE, all docs involved, and be comfortable with your purchase... I know that my old boss purchased some land this way... there also was no agent...

For the faint of heart, I would pay the closing costs..

 

[chas57006]

Do not skip title insurance!

I bought a lake lot at the end of the road. After i made the purchase I found out there was trouble with the next door neighbor who parked her full size tractor in the road so we could not pass.

Had to get a lawyer involved as the lady was claiming adverse posession. As it turned out the road was plotted properly, however it still took 6 months, several court appearances, and over $15,000 in lawyer fees. The title insurance paid the entire bill.

 

[Bamaman]

Good advice given. I bought one house for cash last year, and just paid for title insurance and an inspection. Since the house was on a huge lot in a settled neighborhood, no survey was required.

They can go easy on transaction fees in Texas. But look out on property taxes--where they more than make up for the lack of State income Taxes. My best friend sold his house in N. Dallas when his property taxes hit $50K, and is living in a rental house.

 

[ExFlyBoy5]

That is true.... if you are as the buyer and the seller agree on all terms, you actually do not have to have any closing costs.... but you better know RE, all docs involved, and be comfortable with your purchase... I know that my old boss purchased some land this way... there also was no agent...

For the faint of heart, I would pay the closing costs..

Oh definitely...if there is ANY question on what you are doing, it's best to "outsource" the work. And it's also worthy of noting that even though you may have done a deal all on your own in one state, if you are in another state, that process can be much different. In my case, it's fairly easy since the DW is a broker.

Also, title insurance is VERY, VERY, cheap when a lender isn't involved. To not get title insurance is a really bad move...in my opinion, of course.

 

[travelover]

.........Also, title insurance is VERY, VERY, cheap when a lender isn't involved. ...........

Any idea why? Does the RE agent get a big cut?

 

[Fishingmn]

Any idea why? Does the RE agent get a big cut?

No - the RE agent gets no cut. That would be a violation of RESPA.

And in my experience the homeowners title insurance policy is more expensive when paying in cash but less expensive than the combined lender title policy and homeowner title policy.

 

[rodi]

Also, title insurance is VERY, VERY, cheap when a lender isn't involved. To not get title insurance is a really bad move...in my opinion, of course.

This doesn't make sense to me. The title company is "insuring" for clear title - it has less to do with the buyer's financing... and more to do with possible liens or sketchy recordings on the title.

If there is a problem in the title, that surfaces sometime after the closing - the title insurance company is on the hook (insurance)....

Why would financing change that? Do they do a more thorough search if there is financing? If so, why?

 

[ExFlyBoy5]

Any idea why? Does the RE agent get a big cut?

The agent gets nothing for the title insurance policy. I think the insurers do it because THEY CAN. This is one of the really crappy things about buying things on credit; it's often done at the "lender's convenience", as though they are doing you a favor by lending you money. Here in Georgia, you CANNOT get a mortgage without waiving many of your borrower's rights. It's on EVERY SINGLE mortgage contract that has been written (that I have ever seen, anyway) and I think that's wrong. BUT..i.t's the bank's money, so they can do what they see fit...and of course with the concurrence with the government. As has been said SO MANY times before: CASH IS KING!!!

 

[ExFlyBoy5]

This doesn't make sense to me. The title company is "insuring" for clear title - it has less to do with the buyer's financing... and more to do with possible liens or sketchy recordings on the title.

If there is a problem in the title, that surfaces sometime after the closing - the title insurance company is on the hook (insurance)....

Why would financing change that? Do they do a more thorough search if there is financing? If so, why?

Nope..the title search is all the same. And with automated records in most areas, the "search" is done in a matter of seconds. The issue is that if you have a loan, then you really don't have a vested interest in the property...sure you want to think it's yours, but it belongs to the bank. So if there is a title issue, you might be homeless, but if you financed 100% then you aren't out nearly as much money as a bank is. Like I said, I think it really boils down to: because they can.

A short story: In the case of my primary home, I noticed that the legal description was wrong. Digging through the past several deeds, I noticed it was recorded incorrectly about 15 years earlier and every deed after was also recorded wrong. I contacted a RE attorney to draft a corrective deed and he thought it was goofy and not necessary. But, when I explained that they left off an entire reference to one of the land lots (property covers two of them) and it in essence "hacked off" 1/2 of my property, he then understood. In a really bad case scenario, a situation like that could become a real bear if adverse possession comes into play.

 

[Clone]

My mother purchased a condo many years ago. She could have paid cash for it, but chose to take a mortgage. Primarily because the bank was much more interested in making sure everything was done right. Make sure all of the subcontractor liens ahad been released, nothing odd in the abstract, building inspections done correctly, etc.

We recently built a house. Took a mortgage on it for much of the same reasons. I have seen real estate deals go bad. It cost us some money, but I am OK with it. The bank understands the consequences and concerns much better than I do.

They may seem outlandish and unnecessary expenses, but I look at it like a do-it-yourself will. You can copy something off the web and everything should work fine, but is it worth the risk?

 

[W2R]

Your title company will let you know what closing costs to expect. I would suggest calling them and asking. My guess is that closing costs for an all cash buyer might differ from one state to another, depending on local customs and laws.

Closing costs for an all cash buyer here in my New Orleans suburb are mostly title insurance, plus three small charges for recording services fee, abstract or title search fee, and archive fee.

In my case (buying my dream house this month in cash), the sum of these four closing costs was not enough to lose sleep over. Plus, the prorated property tax for the first part of 2015 is subtracted from my closing costs! This is because the buyer pays for the 2015 property tax, but I didn't get the house until now.

 

[ExFlyBoy5]

My mother purchased a condo many years ago. She could have paid cash for it, but chose to take a mortgage. Primarily because the bank was much more interested in making sure everything was done right. Make sure all of the subcontractor liens ahad been released, nothing odd in the abstract, building inspections done correctly, etc.

We recently built a house. Took a mortgage on it for much of the same reasons. I have seen real estate deals go bad. It cost us some money, but I am OK with it. The bank understands the consequences and concerns much better than I do.

They may seem outlandish and unnecessary expenses, but I look at it like a do-it-yourself will. You can copy something off the web and everything should work fine, but is it worth the risk?

I don't think anyone suggested 'copying something off the web' to protect oneself. To think the bank is going to go above and beyond what a title policy will do to 'protect themselves' is a fallacy plain and simple. But, some of it is peace of mind...if shoveling money off to a bank to bring that peace, then I am certainly not one to judge.

 

[pb4uski]

....The issue is that if you have a loan, then you really don't have a vested interest in the property...sure you want to think it's yours, but it belongs to the bank. ...

Do you really think that? Not the way it really works.

 

[Clone]

...if shoveling money off to a bank to bring that peace, then I am certainly not one to judge.

And I said nothing about shoveling money to the bank.

I try not to practice outside of my realm of expertise, knowledge, and training. I have seen too many real estate deals end up in court. The banks work with this every day.

 

[Debinnov a]

I am in Florida and my recent settlement cost was a total of $455 over the actual cost of the house . Now I'm assuming that includes any prepays and or settlement fees from the agent. I believe the settlement fees were almost $400 so there were very little other costs involved. The seller on the other hand, that's a different story.

Sent from my KFTHWA using Tapatalk

 

[ExFlyBoy5]

Do you really think that? Not the way it really works.

Not to detract from the intent of this thread, but I wanted to address this specifically.

Of course like many things on the internet, what I intended to get across and what came across are two different things.


I stand 100% behind that if you have a mortgage against a property then the bank certainly has a interest in it. And, if you mortgage 100% of the sales price, then the buyers vestment (monetarily speaking ONLY) is much less than that of the banks and they do indeed "own" the property. Legal speaking, you will indeed have a deed to the home "owning it" but you grant the bank a mortgage deed giving them the right to own it if you stop paying (or don't do the 2,213 other items listed on the 20+ deed). That's probably still clear as mud, but perhaps a little clearer, nonetheless.

 

[MooreBonds]

Good advice given. I bought one house for cash last year, and just paid for title insurance and an inspection. Since the house was on a huge lot in a settled neighborhood, no survey was required.

Just because a house is on a huge lot in a settled neighborhood doesn't mean everything is fine.

For example, what if you had an easement running through your property? I have a 390ft deep lot - but a sewer easement cuts across it in half. So if I ever wanted to build a retaining wall or pool or a new house, if I built close to that easement I'm running the risk (albeit, a small one) of the sewer company someday possibly coming through to replace the sewer, and digging up whatever is within that 10ft wide easement.

Or, if your neighbor happened to have hedges growing into your yard, they could be 10 ft into the lot. Even if you have a 200 ft wide lot, don't you want to know where your legal property begins and ends?

I'd never buy something that costs several hundred thousands of dollars without a survey costing a few hundred dollars, since it's almost as important as title insurance, IMO. Sure, if you had a 10 acre parcel, then it might not be as important to know precisely if your lot is 700ft wide or 705 ft wide....but still, if for nothing else, liability exposure would be nice to know where your legal property boundary begins and where your neighbor's (or public street's) ends.

 

[pb4uski]

Not to detract from the intent of this thread, but I wanted to address this specifically.

Of course like many things on the internet, what I intended to get across and what came across are two different things.


I stand 100% behind that if you have a mortgage against a property then the bank certainly has a interest in it. And, if you mortgage 100% of the sales price, then the buyers vestment (monetarily speaking ONLY) is much less than that of the banks and they do indeed "own" the property. Legal speaking, you will indeed have a deed to the home "owning it" but you grant the bank a mortgage deed giving them the right to own it if you stop paying (or don't do the 2,213 other items listed on the 20+ deed). That's probably still clear as mud, but perhaps a little clearer, nonetheless.

That's better. Unlike your earlier comment, you do indeed own the property and have legal title to it. At the same time, you have pledged it to the bank as collateral and they have a conditional interest in the property... if you don;t pay your loan, they can foreclose, take title to the property and sell it to recover the loan. However, while I don't think it happens often, if the proceeds are more than what you owe them on the loan and their carrying costs, they would remit any excess to you.