By: Thomas Carroll, REALTOR ®
When it comes to real estate, there are entry and exit costs above and beyond the sticker price. This information is not meant to dissuade you from owning real estate. The hope is to help you make an informed, intentional decisions because ultimately, the greatest cost over the long term comes in not owning real estate.
There are a few entities that you will be responsible for paying as part of your transaction. As a buyer, first and foremost, you have the local government. There will be transfer taxes and recording fees. If you are in Maryland, this is probably in the ballpark of 1-2% of the purchase price. The second entity is the title company. They will conduct a title search and exam and, if
everything checks out, provide you and your lender with title insurance. These costs will vary depending on the price of your home but will likely come out around 1% or less. The next entity in this transaction is your lender. Their costs also vary but it is likely here that you will see a loan origination fee, appraisal fee and fees for any points you elect to purchase. The last group of payments we will discuss are centered around taxes and insurance. At closing, you will have to establish a balance in your escrow account held by your lender and will likely pre-pay 6-12 months of your insurance and property taxes. When all is said and done, do not be surprised if you pay 4-5% or more above the purchase price in order to close.
When it comes to the sell side, you will likely not be paying a lender or title company (except for loan payoff and loan payoff processing fee). However, it is common to split the transfer fees leveed by the local government with the buyer. Additionally, sellers tend to be responsible for paying broker’s commissions. When all is said and done, on the sell side you are typically looking at 6-8% of the sale price in closing costs.
These costs associated with buying and selling are why your time horizon is so important in making a decision to buy a home. To make if worth your while, you should plan on owning real estate for the long term (unless you are a house flipper). So, if the time is right for you to buy or sell in Maryland, we can help. Give me a call or submit your information through this website and we can get started!