Cost of Selling and Cost of Buying a Home in Texas (Austin: days on market, flat fee)

[XLadylawX]

A question for the RE professionals. DH and I are considering doing a private transaction with our landlord to buy the house we are renting. As many of you know from my previous posts, I DO NOT want to move at this time.

I know what the landlord is is planning to list the house for but I'm trying to figure out his actual costs associated with selling the home so I can formulate an offer.

If he uses a broker, he is automatically out 6% but what about other costs?

Also, what costs can a buyer in Texas expect to pay?

[DenverBrian]

I'm new to the Texas market, but based on my experience in other states you're definitely NOT out 6% "automatically" when selling. Find an agent who will negotiate the commission.

On the buying side, the title insurance policy appears to be a big hit - about $2K in my case, but the builder is paying it in my case.

[Austin97]

Originally Posted by XLadylawX

A question for the RE professionals. DH and I are considering doing a private transaction with our landlord to buy the house we are renting. As many of you know from my previous posts, I DO NOT want to move at this time.

I know what the landlord is is planning to list the house for but I'm trying to figure out his actual costs associated with selling the home so I can formulate an offer.

If he uses a broker, he is automatically out 6% but what about other costs?

Also, what costs can a buyer in Texas expect to pay?

In cases where I have found the property myself I have negotiated a lower fee to help me walk through the transaction - say 1-2K.

A lawyer can help you through the paperwork, but a good agent will talk you through the whole process

[hound 109]

Originally Posted by DenverBrian

I'm new to the Texas market, but based on my experience in other states you're definitely NOT out 6% "automatically" when selling. Find an agent who will negotiate the commission.

On the buying side, the title insurance policy appears to be a big hit - about $2K in my case, but the builder is paying it in my case.

I agree that 6% isn't a given. (I've been out 3% & 4% on my last two selling transactions). BUT.....if i was BUYING....i'd assume the seller would be out 6% & would factor that into my calculation.


Regarding Title Ins....it's always been a seller expense in all transactions i've been apart of. (except one)

Only time i've had to pay the title policy is when a builder refused to pay for title unless i used their incestuous mortgage company (who weren't even IN Austin)...I had already knocked 16% off list at that point (no realtor was involved) & the builder refused to budge on the title item (about $2200)

[Austin97]

Originally Posted by hound 109

I agree that 6% isn't a given. (I've been out 3% & 4% on my last two selling transactions). BUT.....if i was BUYING....i'd assume the seller would be out 6% & would factor that into my calculation.


Regarding Title Ins....it's always been a seller expense in all transactions i've been apart of. (except one)

Only time i've had to pay the title policy is when a builder refused to pay for title unless i used their incestuous mortgage company (who weren't even IN Austin)...I had already knocked 16% off list at that point (no realtor was involved) & the builder refused to budge on the title item (about $2200)

In her particular case, I wouldnt assume that since they are renting it and it doesnt sound like the house is on the market now.

The total transaction costs seem like they should be under 2-3k or so.

One other thing I would do is get an agent to run comps. I know that you dont want to move, but one thing to consider is that you can hire a moving company to pack all of your boxes etc for 5K or so. So if the comps are out of line (i.e. the guy wants too much money) you can move with little hassle by hiring people to do it for you.

[TheyCallMeDerek]

The seller will also have to pay property taxes up to the closing date and their own closing costs. A buyer's closing costs will include prepaid's like insurance, lender's origination fee etc....expect to pay about 3%-4% of the purchase price. This is why so many buyer's ask the seller to pay some or all of the buyer's closing costs.

[ROY DUBOSE]

why don't you just get an agent to help you? they'll save you money and protect your interests -- why go it alone?

[IC_deLight]

Along with an agent comes a broker...

Although a great agent can certainly be an asset, there are many, many real estate professionals that care naught for anything but "closing the deal". If you are considering an agent, also consider a flat fee payment or 1/2 the normal commission. After all what are the services you are looking at? There is no listing, no searching, etc. You do not need a license to purchase real estate for yourself.

If you are purchasing HOA-burdened property, however, make sure to request the subdivision information and resale certificate. Is this a scam? Yes for the most part it is, no doubt. The only thing of value to the purchaser is the estoppel effect of a signed resale certificate. The title company will undoubtedly request one anyway if there is an HOA. However title companies routinely fail to ensure that the certificate is SIGNED. HOA management companies deliberately deliver those certificates unsigned for a reason. They are trying to leave the door open to make a buck off of you later since an unsigned certificate is not enforceable against the HOA or its agents (i.e., the management company that sold the certificate).

As to the forms, you can obtain the standard forms from the Texas Real Estate Commission Website including the addendum request for the subdivision information.

Although there are certainly customary practices and real estate professionals would know them, everything is ultimately negotiable. You need to figure that the seller is looking at a minimum of 7%. The title insurance is a fixed fee or percentage based on the price of the home and you can obtain that from the Texas Department of Insurance and that's included in the 7%. You are already there and the seller would not need to bear the unknown risk of days on market, more months of mortgage payments, insurance, and taxes. The 7% of course is from the fair market value not the listing price. Anything above the FMV is chaff the seller could not expect to get anyway. You might consider getting an appraisal from a licensed appraiser to help with pricing.

[ROY DUBOSE]

Originally Posted by IC_deLight

Along with an agent comes a broker...

Although a great agent can certainly be an asset, there are many, many real estate professionals that care naught for anything but "closing the deal". If you are considering an agent, also consider a flat fee payment or 1/2 the normal commission. After all what are the services you are looking at? There is no listing, no searching, etc. You do not need a license to purchase real estate for yourself.

If you are purchasing HOA-burdened property, however, make sure to request the subdivision information and resale certificate. Is this a scam? Yes for the most part it is, no doubt. The only thing of value to the purchaser is the estoppel effect of a signed resale certificate. The title company will undoubtedly request one anyway if there is an HOA. However title companies routinely fail to ensure that the certificate is SIGNED. HOA management companies deliberately deliver those certificates unsigned for a reason. They are trying to leave the door open to make a buck off of you later since an unsigned certificate is not enforceable against the HOA or its agents (i.e., the management company that sold the certificate).

As to the forms, you can obtain the standard forms from the Texas Real Estate Commission Website including the addendum request for the subdivision information.

Although there are certainly customary practices and real estate professionals would know them, everything is ultimately negotiable. You need to figure that the seller is looking at a minimum of 7%. The title insurance is a fixed fee or percentage based on the price of the home and you can obtain that from the Texas Department of Insurance and that's included in the 7%. You are already there and the seller would not need to bear the unknown risk of days on market, more months of mortgage payments, insurance, and taxes. The 7% of course is from the fair market value not the listing price. Anything above the FMV is chaff the seller could not expect to get anyway. You might consider getting an appraisal from a licensed appraiser to help with pricing.

it is true that a broker comes with an agent and there are some "just close the deal" types (as in any industry) -- you migh want to ask yourself if the agreed price is fair market value and you'd want (i'd think) to know how to make the deal really work for YOU -- also, i'd be cautious having to pay for an appraisal twice -- a lender's gonna do order their own -- there's lots of pits out there and a good agent will steer you around 'em --

[XLadylawX]

Originally Posted by ROY DUBOSE

why don't you just get an agent to help you? they'll save you money and protect your interests -- why go it alone?

I could probably take care of this without involving a lot of people and I would like to negotiate a deal alone with the seller to help him out too. (Not all lawyers are out to steal your money. )

After speaking with his agent/friend, it appears I know a little more about this whole transaction than she does.

I know what the owner paid for the house, I know what he financed. I know that he has a lien for non-payment of child support. I also know, that if he places the house on the market, and we move as we are entitled to do at the end of our lease, he will likely lose the house.

Finally, I know what homes are listed for in the neighborhood. I am keeping track of the FEW tht sell and from my own observations, I can tell when homes are languishing too. I got me this fancy Excel Spreadsheet that I've been using to track the sorry state of real estate in our neighborhood.

In short, the owner of our rental is screwed for lack of a better word. If we bring an agent in, he is going to lose $15k minimum. I can save him that money or perhaps I can get him to shave some of that $15k off the price of the house. Perhaps he could even use some of that $15k to clear that little mess with the child support.

In any case, I'm trying to get an accurate estimation of his expected transaction costs associated so I can put together a good deal.

If an agent won't give me a run down of the costs, would anyone be willing to disclose to me what their costs were if they recently sold a home?