Calculating Transaction Costs in Real Estate Investing
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Calculating Transaction Costs in Real Estate Investing

A good agent should be able to come within a hundred bucks of telling you what your closing costs will be. Sometimes agents will want you to use a particular title/escrow company.
                          closing costs in real estate

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Is the commission rate negotiable?

You'll want to ask your agent this when you're selling and sometimes even when you're buying (using a buyer's agent that you have to pay). The answer is that it certainly is negotiable - there is no set rate anywhere in US. Having said that, keep in mind that some agents have a minimum commission rate they charge, and they won't work for anything less. If the agent says he or she wants a specific rate and won't budge, it's probably a better idea to simply look for a different agent. Pressuring someone to work for less than they think acceptable is the surest way to get poor service.

How much are the closing costs?

A good agent should be able to come within a hundred bucks of telling you what your closing costs will be. Sometimes agents will want you to use a particular title/escrow company. Many agents insist that both buyers and sellers use an escrow and title insurance affiliated with their real estate company. They often say that this is a title/escrow company they've used in the past and that they feel comfortable it will handle everything correctly and at minimum costs. Just remember, however, that it's up to you (and the other party) to decide on which escrow and title insurance company to use. The agent can suggest, but cannot normally demand. Note that the bundling of services (where the agent gets a kickback) is unethical and, in some cases, illegal, but recommending an affiliated company usually isn't so long as the affiliation is disclosed and you agree to it. Also keep in mind that if you're the seller, RESPA (the Real Estate Settlement Procedure Act) says that you cannot dictate what title insurance company a buyer may use.

How much will title insurance cost?

Be sure that you ask this of the title insurance company before you hire it. While, some states fix the rates with a sliding scale based on the sales price, others allow negotiations. Try to find out if the home was recently sold. If it was sold within the previous few years, ask for a reissue rate. It can save you a considerable amount of money if the title company is willing. When you discuss price with the title company, be sure you know with whom you're dealing. If it's simply the clerk in the front who answers the phone, chances are the answer is going to be, "Sorry." On the other hand, if you deal with one of the officers of the company, then you have a chance of striking a bargain. Never be afraid to point out how many deals you're bringing the title insurance company. The more deals, the better client you are. And many companies have a special discount rate for their best clients.

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