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The following was written by guest blogger James P. Schlimmer of IRA Title Pro, an Equity Trust affiliate.
If you’re a buyer or seller of an investment property, you’re probably asking yourself, “What are closing costs and how much should I anticipate paying?” Closing costs are fees that are due at closing along with your down payment for services and other expenses to either secure your loan or finalize the sale of your property.
The approximate closing costs for a buyer could fluctuate wildly based on how the buyer is going to pay for the investment property. If the buyer is paying cash, they should see minimal closing costs – especially if the purchase sales contract has the seller paying for the owner’s title insurance policy.
If the buyer is obtaining financing to acquire the property, they could see closing costs range from 2-6 percent of the investment property price; meaning if you purchase a home for $200,000, you can anticipate paying anywhere from $4,000 to $12,000 on top of your down payment to close.
A seller’s closing costs can also see quite the range, and this depends on whether or not the seller is working with a real estate broker. The typical broker commission is 6 percent of the purchase price, and that’s on top of the owner’s title insurance policy if that’s listed as a seller expense in the sales contract, as well as documentary stamp tax, deed transfer tax and any association dues tax payments that were not paid in advance but accrued during the time the seller owned the property.
Because closing costs can vary between each state, county, and municipality, it’s important to research the specific closing costs of your area to get precise numbers. This can mean talking to your local government or real estate broker for average fees or using IRA Title Pro’s Closing Cost Calculator for a report.
The costs associated with closing on an investment property can be daunting, which is why it’s best to make sure you understand the expenses so you can be fully prepared to complete your transaction. Not only will closing costs vary based on purchase prices and services rendered, but they also differ from state to state. Some states require certain closing costs while others do not. Check out the closing costs calculator now to see what costs you can expect on buying or selling a property.
While there are various fees and expenses to be paid at the closing of any investment property, these costs can be organized into three categories for easier understanding. A thorough examination of every tier and each process will help both buyers and sellers learn where their costs go.
Both buyers and sellers can expect to pay closing costs on their investment properties. Being proactive in understanding these fees is imperative and calculating these costs will ensure you’re prepared to complete your transaction without any surprises. Take the initiative and get an accurate estimate on what you’ll pay at closing by using IRA Title Pro’s Closing Costs Calculator.
James P. Schlimmer is the CEO of Equity Real Estate Services and the President of IRA Title Pro. Renowned as a pioneer in the real estate industry, Schlimmer has been paving the way for innovation in a field that has been stagnant and overly complicated for far too long. For nearly a decade, Schlimmer has worked diligently, assisting buyers and sellers by revolutionizing the closing process with a more modern, seamless approach.
IRA Title Pro is a real estate closing company specializing in IRA-funded transactions, providing a quick and seamless process compared to traditional closing companies that may not have the experience needed for a streamlined IRA real estate closing.
IRA Title Pro is powered by Investors United Title, who is an affiliate of Equity Trust Company through common ownership. Neither company is an agent of one another. Equity Trust Company is a directed custodian and makes no recommendations or representations as to IRA Title Pro and any information communicated by Equity Trust Company is for educational purposes only and should not be construed as tax, legal, or investment advice. Clients are in no way obligated to purchase services from IRA Title Pro and are free to purchase such services from any title company as they deem appropriate. No customer may rely on any statement made by Equity Trust or any of its officers, directors, employees, or agents for any decisions regarding the use of the service offered by IRA Title Pro. Whenever making a decision related to your account, please consult with your tax, financial, or legal professional.
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