EXPENSES FOR BUYER

Hi Linda,

Anyback taxes, leins, judgments, etc. owned by the seller. That, the seller will be responsible for. Cling costs aren't that much, not anywhere near $2k to $8k. Thev've already factored that into their equity, so you don't have to worry about it. That's why they're getting these homes at a discount from you.

As far as commissions go, your agent (if you use one to buy an reo) is paid by the seller. Other commissions as far as contractors, are rewarded when they get hired to actually do the rehab work. Anyone else such as a bird dog, you would pay them if they brought you the deal.

It's not as bad as you are thinking. I hope this helps unconfuse you.

so..seller of course pays for any back $ owned as you stated re: taxes, liens, judgement, etc. You say closing costs aren't that much because of the total amount of the deal, or what factors do you base that on because i've seen closing costs be pretty hefty. Or so my son says. or are they just inexpensive due to the fact that they are cash deal assignments?

As far as any of my "team" members I use for each deal...agent fee is paid by "seller"? On any property the agent brings me? Who pays the attorney, title company? I understand I pay a bird-dog fee from my profit.

Thanks for you help.

Linda

EVERYTHING is negotiable. I've had buyers pay closing, had sellers pay closing and had them do a 50/50 split or seller pays up to a certain amount and buyer covers remaining.

Dallas is correct, typically seller pays commissions for agent. but they factor that into the price when listing.

Your fee is your fee. Remaining expenses are absorbed through negotiations of the buyer and seller.

Thanks,
Jen

Thanks for the info Jen.... more comments/questions....if you get a really good price for the property, you can't expect the seller to pay any closing costs, including the agents fee, i'll assume....but you can the buyer. do i have to be involved with negotiations to handle any remaining expenses between buyer & seller?

so the big question left is....how are the costs for closing determined? and the investor buyer should probably already know that would be expected of them...to pay closing costs.

Thank you.

Linda

Hey Linda,

Depends on their motivation for selling. I know during my lock up who's going to responsible for what. I determine what the seller will and will not do. If the expense is weighted to my buyer, I DO take that into account and make sure I capture it in the contracted price. Therefore not being an added expense to my buyer, but already factored in.

closing prices vary on several factors. ex: if there's a break in the chain of title and additional research is need will increase the cost. whether it's a cash sale or if they are pulling traditional funds (underwriting, appraisals, fees, processing, etc. can add up quick.) example a straight cash sale: abstract, attorney fees closing, doc prep, recordings, title insurance, adjusted prop tax, etc. one of my closing was buyers expense was $581.03. On another deal where buyer used traditional lending closing came to $2,814.92. As a rule of thumb on my offer calculations I reserve 3% for closing when determining my buy price.

To the question of your involvement in negotiations. For me the answer is YES definitely. I like to stay in control and involved in every aspect of the deal to the closing table. I like to be the bridge. Meaning having my buyer go through me to contact seller. I don't give my buyer my sellers contact info. If there is a direct issue to arise and we need to re-negotiate price or terms, I have both the buyer and seller meet me at the property, we work it out face to face and get it done.
I make sure each and every step is getting done and what NEEDS to be done to close the transaction. Inspections, appraisals, insurance, etc. I confirm whatever needs to happen. I don't leave the responsibility as to whether or not I get paid up to someone else. Bottom line people drop the ball or as they say what you don't know, you don't know. I do make sure I (me & my team) do all the heavy lifting. I strive to make the transaction as clean and painless for the seller and buyer as possible.

I am the facilitator, I am the problem solver. I get it done.

God bless,
Jen

paragraph #1...meaning you give the buyer a better price if he has to pay closing? how does that affect my profit?

paragraph #1...as a rule of thumb...meaning you offer 3% less or more to buyer? not quite getting that picture.

paragraph #3...i get it!

Thank you so much.

Linda

Hey Linda,

No, questions are how we learn.

your fee in the deal is your fee. look at it like this: you go into the grocery store to buy a gallon of milk. Say the price on the shelf if $3.50. You get to the counter and of course now you have to pay tax on that item. the tax isn't deducted from the price it's added to it. So if you want to walk out of the store with it you have to pay the price plus tax right.
Same applies to closing. On an assignment when your buyer has looked at the property, read the PA and is ready to sign the assignment contact that lists your assignment fee as you indicated was $10k. He's agreeing to the terms on the contract and purchase price PLUS paying you the fee to step into your shoes as the buyer. Make sense?

you have to look at the front and back of the deal. to make sure you have IN the deal your buyers required profits. I capture my buyers back-end transaction: commissions, closings, holding, money cost, profit, rehab, etc. into account IN my offer price. The front end transaction (close) yes, I look to capture a property low enough it's absorbed. BUT the seller paying close is just 'sweetening' the deal. BUT don't get so focused on pinching pennies. That's not what we are doing here. Don't step over dollars to get to dimes. If your pinching pennies to make it work, MAY not be as good of a deal as it looks. If I am locking up a property at $.30, .40, .50 on the dollar.....who cares about the $500 to close it. That's the change you take out of your pocket and throw on the counter before you get in the shower. LOL

hope that is a little clearer??

Great questions!
keep making it happen!!

Blessings,
Jen

Thanks Jen for all your wisdom!

Blessing to you.

Linda

my pleasure Linda!

have an amazing day!

jen

Great class Jen, whether one is experienced or just getting started in REI. Not just the infor, but the style, the confidence and the ATTITUDE.