When a home for sale is bought and sold in the Hemet - San Jacinto Valley, CA the process will typically go through escrow to facilitate the transfer from the home seller to the homebuyer. The expenses of the transaction, other than the actual purchase price are generally lumped together and commonly referred to as ‘Closing Costs".
Both the buyer of the real estate, and the seller of the home typically incur Closing Costs but it is often negotiable as to who will actually pay these expenses...depending on both local custom as well as what the buyer and the seller negotiate between themselves in order close a real estate transaction.
Some of the individual costs that are lumped into the generic term of ‘Closing Costs' include the fees paid to both the Title Company and the Escrow Company. Property taxes have to be brought current, up to the close of escrow and in some cases future taxes are required, by the new lender.
There are document fees, recording fees, termite inspection fees, transaction coordinator fees and any number of other miscellaneous charges that are billed to the transaction. Sometimes, these smaller charges are referred to as ‘garbage fees'. For me, what that term implies is that they are fees that are made up and added to the transaction as unnecessary profit centers. Granted, there have been a lot of unscrupulous people in this industry who have tried all sorts of ways to make a buck, but for the most part, these ‘garbage fees' are legitimate single line item fees instead of lumping them all together with a higher amount. With the line item system, the buyer and seller - the people paying the fees can see exactly where their money is being spent.
Both the lender and the escrow company should be providing estimates as to what will be required to close the escrow, in advance to each party of the transaction.
CAN WE CUT THE COSTS?
Of course, there is always room to negotiate - especially when a deal gets real close to the end and just a small amount of money separates the two from a successful close.
The first thing the buyer should do is continuing to negotiate with the seller, if possible, for the seller to contribute more towards the closing costs. Under current FHA guidelines, the seller is allowed to contribute up to 6% towards closing costs. Some Buyer Agents feel they are leaving money on the table if they don't take full advantage of this and consider it a windfall for their buyers.
Early in the transaction, the buyer should carefully consider their loan options. There are no-point and no-fee loans available. Yes, the interest rate may be a little higher but if it means getting into a home with less money out of pocket, then that can make it a worthwhile investment.
THE CLOSE OF ESCROW
The actual close in the Hemet - San Jacinto real estate market is unlike what happens in the rest of the country,, where the buyer and seller actually go to a closing table. Here, the event is rather uneventful, as we wait for a phone call around 4 in the afternoon with confirmation that the deed has recorded.
The stress is in the day or two proceeding when Escrow announces to all parties that they are "ready to close" as soon as the... and it can be anything from the buyer to bring in cash, the seller to sign a document, the lender to wire the funds...and so on.
AND WHAT ABOUT BEFORE THE CLOSE?
A few days before the anticipated close of escrow it is always in the best interest of the buyer to do a final walk-through of the home. The purpose is two-fold.
First, you want to inspect the property to make sure it is substantially in the same condition as when the buyer wrote the offer on the home, when it was for sale. I always recommend to my buyers to bring a camera to document each home they write offers on, just for this very purpose. I have had homes that had nice 6 burner ranges in the kitchen at the time of purchase and then at the final walk through the stove had been replaced with a cheep apartment stove. I have seen ceiling fans removed and replaced by cheep light fixtures. Almost anything is possible, so check the place out.
The second reason for the final inspection is more upbeat and should really be the focus. This is a great time to start taking inventory of what projects you will be starting with as soon as you close escrow. Measure Carpet, count electrical switch covers,, heck anything you want to do... this is the time to get prepared both mentally and with actual preparation.
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