Esrimation of closing fees

[Madeline Lamour]

Beware NH investors,

Hello all, I am moving to NH in a few weeks and I have been studying the market and running the numbers on a few properties. I am on BP almost everyday, whether it is reading articles or listening to hundred of podcasts. However, there is still one thing I don't have a grip on: all the fees associated with buying a property. I have 8 doors in France, and over there, it is simple: the price of the property includes the agent fee then you add about 9% of the house price for the closing costs (notary) and that's it. In the USA, is the agent cut included in the asking price? Then how to count the closing costs for an accurate estimation of the total amount needed? Is there an average percentage?

I don't want to think I only need 5000$ down on a 100000$ property ro then discover that I need another 5000 for closing costs.

Thanks for your answers,

Madeline

[Zach Jones]

Hey Madeline, welcome to the USA! Great Question.

Every state can vary, but what I tell my buyers is to expect closing costs to be somewhere around 3% of total purchase price. Here in Arkansas, the typical commission fee for Realtors is 6%. However, the seller pays the commission -- unless its negotiated. Personally, I have never had a buyer pay a commission fee for my services, it has always been the seller. 

The purchase price is typically not altered by the commission fee. 

Hope this serves you well.

[Troy Zsofka]

Hello @Madeline Lamour

Here's a breakdown of what to expect in NH:

-Commissions: Buyer's agent receives a portion (typically half but not always) of listing agent's commission paid by the seller. Of course, if you are buying an off-market or FSBO, there will be no listing commission to split; so if you have buyer's representation, their commission will be on you.

-NH State Transfer Tax Stamps: $15/thousand of purchase price, split 50/50 between buyer and seller (unless agreed otherwise); so typically 0.75% of the purchase price paid by the buyer.

-Settlement Fee: $595-795 depending which title company you hire to close the transaction

-Owner's Title Insurance Policy: Roughly 0.2-0.3% of the purchase price

-Recording Fees and other Misc: Another couple hundred dollars

Fees that will only be present if you are using a mortgage to purchase the property:

-Origination Fee: Varies and is typically represented as a percentage of the loan amount

-Lender's title insurance: Another roughly 0.2% of the loan amount

-Appraisal: $500-650

-Misc Junk Fees: Processing, credit report, flood cert, etc etc etc: A few hundred to a thousand dollars depending on the mortgage company

Costs that are not fees but still need to be settled at closing:

-Prepaid interest (if there's a mortgage)

-First year insurance premium

-Impounds to set up tax and insurance escrow accounts (if there's a mortgage that escrows T&I): A few month's worth of each

-Prorated taxes, water, sewer

-Heating fuel remaining in tanks

Welcome to New Hampshire, and happy investing,

Troy

[Madeline Lamour]

Thank you very much, it is useful. Thanks Zach for a fast way to estimate and thanks Troy for such a detailed break down of the fees. I will definitely save all that.

[Nathan Gesner]

@Madeline Lamour in my area it's more accurate to assume 1% of the purchase price. The closing costs are different in every market.

You should be working with a Buyer's Agent. This is a real estate agent that works for you and their commission is paid for by the seller. They can provide you with an estimate of closing costs for each house you express interest in.