High seller closing costs for land sales....what to do? (commission, fees)

[ColoGuy]

I just sold a cheap parcel of raw land for $2400. This is the closing statment:
Unpaid county taxes: $25
Sales commission: $500 (this is their minimum...not a huge problem)
Closing fee to title company: $400
Title Insurance to title company: $360
Total closing fees to seller: $1285....a large piece of a $2400 sale

I have eight more parcels for sale. I am trying to sell one by myself.....after learning more about the high percentage gobbled up by closing fees for cheap land.

I have bought parcels where the previous owner just gave me some paperwork that I presented to the County Land office. The fees were extremely cheap. No title insurance but I have read that title insurance is rarely more than an exercise in printing money.

Then again....I sold an inherited home in Texas. Closing procedures found a lien on the property by the ex-owners ex-wife....for ~$10,000. So we had to pay that from the sales proceeds. Then again....that was a home.

I had a real estate license in the 80's. Took a few law courses in college. Memory fades with time.

[rrah]

Costs are what they are. Perhaps you can make a deal with the title company that you will have them close the other 8 parcels for a reduced rate? Worth asking since it would be repeat business.

Personally I would NEVER buy a land parcel without title insurance. If you can find someone to do what you did in the past, then you won't have the costs.

[FalconheadWest]

Why is the title policy so expensive?

[2bindenver]

Raise the price by the title insurance fee.

[ColoGuy]

Good question. That is my only real problem with the aforementioned expenses. They do a search for prior liens....which, I think, should be done. If I got paid $360 for every search I did, I could buy a few islands.

I read some lamenting on title insurance a few years ago. Only thing I really remember is that many experienced people think it is outrageously overpriced. I'll bet a savvy person could search for liens through the County Courthouse.

I wouldn't mind $360 if the land sold for several thousand. But five of my parcels are less than $4000. I feel like I am being eaten alive.

Originally Posted by FalconheadWest

Why is the title policy so expensive?

[marksmu]

Originally Posted by ColoGuy

I just sold a cheap parcel of raw land for $2400. This is the closing statment:
Unpaid county taxes: $25
Sales commission: $500 (this is their minimum...not a huge problem)
Closing fee to title company: $400
Title Insurance to title company: $360
Total closing fees to seller: $1285....a large piece of a $2400 sale

I have eight more parcels for sale. I am trying to sell one by myself.....after learning more about the high percentage gobbled up by closing fees for cheap land.

I have bought parcels where the previous owner just gave me some paperwork that I presented to the County Land office. The fees were extremely cheap. No title insurance but I have read that title insurance is rarely more than an exercise in printing money.

Then again....I sold an inherited home in Texas. Closing procedures found a lien on the property by the ex-owners ex-wife....for ~$10,000. So we had to pay that from the sales proceeds. Then again....that was a home.

I had a real estate license in the 80's. Took a few law courses in college. Memory fades with time.

For extremely low priced land like you are talking about I would just put in the contract that Buyer can buy the title insurance if they want it.

Most people buying lots offered at such a low price are not savy enough to know they need title insurance...even then, if the insurance eats your profit make them pay. Remember Title Insurance is OPTIONAL, not required.

Yes it is customary for the seller to pay the title policy, but I think most realtors can easily explain to their buyers that due to the high cost of the insurance and the low sales price the seller is not willing to pay for the insurance.

May also look at a different title company and see if you can get a better deal.

[FalconheadWest]

Originally Posted by ColoGuy

Good question. That is my only real problem with the aforementioned expenses. They do a search for prior liens....which, I think, should be done. If I got paid $360 for every search I did, I could buy a few islands.

I read some lamenting on title insurance a few years ago. Only thing I really remember is that many experienced people think it is outrageously overpriced. I'll bet a savvy person could search for liens through the County Courthouse.

I wouldn't mind $360 if the land sold for several thousand. But five of my parcels are less than $4000. I feel like I am being eaten alive.

In Texas, the title policies are regulated by the state. The price should be for the cost of the policy only. The check they do for liens and other issues would be in the aforementioned $400 closing fee to the title company. That fee includes the time they worked on the file to ensure clear title.

[oregonwoodsmoke]

I think you are bumping up against minimum charges. 8 more and you are only clearing about $1,000 each. It almost makes more sense to donate them to a registered tax exempt charity and to take your tax deduction.

At that price range, you can probably sell them FSBO and save the realtor's commission. There isn't much you can do about escrow fees, except for maybe to shop around and see if you can find a cheaper place. My experience is that the escrow companies all charge about the same and have the same fees.

[ss20ts]

It's the cost of selling land! Raise your prices. In many states, the law dictates title insurance. Some banks require it as part of the financing. Frequently land purchases are wrapped up into a construction loan.

[ss20ts]

Have you tried selling them FSBO? Run some newspaper ads or ads in weekly Pennysaver type of thing. A For Sale sign at Lowe's is a couple of bucks.