Closing Costs – How Expensive are They?

Calculator

It depends upon where you live, of course.

Bankrate did a survey in 2009 and 2010 of 49 states, 2 areas in California and the District of Columbia.

The 5 most expensive states for closing costs are:

  1. New York – origination fees, title and closing costs = $5623
  2. Texas – origination fees, title and closing costs = $4708
  3. Utah – origination fees, title and closing costs = $4605
  4. California – origination fees, title and closing costs = $4566
  5. Alaska – origination fees, title and closing costs = $4327

North Carolina ranked 51 out of the 52 areas surveyed with total closing costs averaging $3255.  Hooray North Carolina!  Everyone should live here!

Arkansas was the least expensive coming in number 53 with costs averaging only $3007.

These numbers were based on a $200,000 purchase with 20% down.

For a breakdown of costs in your state, check out Bankrate.com.

Why is it important that you understand your closing costs?

Find a Home on Google Maps!

Do you know how to find a home using a Google Maps? You can even see the neighborhood!

How Much can You make When You Buy a Property?

Dollar Dice

Do you know how to buy? Do you know how much you should pay for a property?

We use a formula called our “cost to sell” guidelines. Filled out, this chart tells us exactly what our costs to buy will be and what we can offer in order to be able to later make a profit.

We begin with our comps to determine the market value of the property. We then subtract from that number the seller discount because most offers come in 3%-5% below asking price. Next, we subtract out our other costs: realtor commission, closing costs, holding costs, repairs, insurance, loan payoff, etc. We go over these numbers with the seller so they can understand the costs they will incur to sell their property and that these will be our costs, as well.

Most people don’t realize when they list their properties that it will cost them about 20% to sell because of all the associated fees. So, if you list a home for $100,000 you will actually realize about $80,000 at your closing.

I want to share with you the importance of following the “cost to sell” guidelines when making offers.

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Is it Better to Buy or to Rent?

Calculator

The New York Times Business Day put out a great calculator that I hope they never take down!

It shows costs accumulated for 6 years for both buying a home and renting a property.

What they determined (and I will argue a bit with their conclusions in a minute) is that it is better to rent if you’re staying less than 6 years but better financially to buy if you plan to stay in the home longer than 6 years.

I do, however, agree with their original premise that whether renting is better than buying depends upon many factors including how fast prices and rents rise and how long you stay in your home.

This is a very detailed calculator and I love it. A word of caution when you check it out because, as it’s set up, the default that you first see leaves out a few points I consider very important:

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How to sell your home.. Discount!

for Sale

The economy is down and the market is flooded with properties, both retail and Bank owned.  This is not a good time to list a property unless you can sell at a discount.

I’ve been reading lots of news articles lately all encouraging low pricing to get your property sold. Trulia, PMI, Moodys, the Wall Street Journal, even the National Association of Realtors all say that retail pricing will not get your property looked at in this market.

This morning on Facebook, a Realtor posted that only 25% of the listed properties will actually sell! That stat is end of 2nd Quarter 2010 based on GRRA- Greensboro area of Guilford County – Realtor Association.  Yikes!

Trulia announced that 24 percent of listings currently on the market as of July 1, 2010 experienced at least one price reduction, up 9 percent from the previous month.  They go onto say that 22 of the top 50 cities across the U.S. experienced price reduction levels at 30 percent or more compared to just 10 cities the previous month.

It appears that the expiration of the tax credit has hit the market hard and there are far fewer “left over” buyers now that the credit is gone than expected. Some are predicting that, due to the slow summer sales, we will experience a double dip in the housing crises during the second half of 2010.

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Foreclosures are Hard to Buy

Cash

But how do we notify the banks?

I read an article where a realtor worked to find out about a boarded up house in a very nice neighborhood. It had been neglected for months and many people were “interested” in purchasing.

What she found out in her investigation was alarming; the husband/wife realty team who had been given this REO months earlier had a total of 500 REO’s to handle and couldn’t handle the volume!

My question is, do banks check or follow through with any of this? Do they have a department of “foreclosure follow-up”? I doubt it.

What a shame. I’m also constantly amazed by some of the realtors who get REO’s. We have tried working with many who have made the process from our end, cash buyers, a nightmare.

What I know for sure is this;

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How to Make an Offer to a Seller

Invest

By now, I’m sure you know that I invest in real estate. And that I recommend it to everyone. And that I think this is a fabulous time to be buying.

Last night, at our Mastermind meeting, the main topic was how to present your offer to the seller.   This is the most important part of the entire buying process and, done right, it takes time. Don’t just hit someone over the head with your offer, take time to sit and talk with them, in depth, about how you came up with your offer.

Before you meet with the seller you’ve already done your homework and determined that you want the property, the market value and what you can pay for it. You’ve determined that you can resell for a profit if you plan to resell, or cash flow it every month if you plan to hold it and rent it out.

So you go to the seller armed with your research.  There are a number of things you need to take with you.

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Is this a good time to buy a home in Greensboro?

Here are the Greensboro, NC city statistics according to Money Magazine.

Looks like we’re predicted to hit bottom at the end of 2010. Even so, our drop from our peak in the first quarter of 2009 will only be about 3% total. We live in a great area of the country!

Population:
(2006)		 685,378
Median family income:
(2008)		 $56,100
Median home price:
(2009)		 $132,000
Affordability index:
(Median home price/family income 2009)		 2.4
Prices peaked in: 2009:Q1
Total climb during the boom:
(2000 to peak)		 29.1%
Total decline so far:
(Peak through 2009)		 -1.2%
One-year change:
(Q4 2008 to Q4 2009)		 -0.2%
Additional price change to bottom: -2.0%
When we’ll hit bottom: 2010:Q4

*(Q1 2010 – Q1 2011)

† Data is for Greensboro-High Point, NC Metropolitan Statistical Area

Sources: Fiserv and Moody’s Economy.com

Triad faces Shortage of Housing Lots

lot

Thinking about building?  Now is a great time to buy your lot.

According to a report by MarketGraphics, a housing research firm, there are just under 20,000 developed residential lots in the Triad.  Builders estimate that only about 1/3 of these lots are worth building on and the inventory is expected to be gone in 2011.

Many of these lots are in subdivisions where the builders have been foreclosed or their projects have stopped.  Many have roads, sewers and amenities already in place.  And, many of those lots are priced at only half of what they were two years ago.

Banks are eager to get these lots off their books and to get the neighborhoods back into stable condition.  They may be willing to provide loans to, once again, have a performing asset.

Because the housing market has taken such a hit, many are predicting that new developments will not be started for up to two years making these available lots even more precious.

When searching for a lot, use the same parameters you do when searching for a home – look for stable areas with good schools, convenient shopping and access to major highways. As always, its all about location. Location is the one thing you can never change about your property.

It may be a few years before some of the areas and some of the lot values pick back up but, if you’re planning to buy or to build, this is a way to get quickly and cheaply right now into an area you couldn’t otherwise afford.

Happy Birthday, Karen’s Perspective!

Happy Birthday!

My blog just turned One!

Thank you to my readers for faithfully following my perspective!

Have you signed up with me yet by clicking on the RSS feed icon to the right of this post?  I would certainly appreciate it!  If you do, you will receive my new posts automatically!

My very first post one year ago was entitled Benefits to Buying a Home Now.  Interestingly, for the most part, it still applies so.. here it is again!:

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