While the stated purchase price of a home in Pittsburg is the starting point, it doesn’t represent the buyer’s total outlay and doesn’t represent the seller’s final income.
Many other details determine the true bottom lines for each. Many of these details, along with the purchase price, become points of negotiation.
The first – and largest – adjustment is probably the request for the seller to pay some or all the buyer’s closing costs. Depending upon the loan program, this could be as much as 9% of the purchase price.
On a home valued at $300,000, paying buyer’s closing costs would mean a $27,000 reduction in proceeds for the seller – and a $27,000 savings for the buyer. On top of that, there are the real estate commission, title insurance, and other closing costs which always apply to the seller.
Then there are the inspections, the appraisal, and the repair allowances. Buyers usually pay for the inspections and appraisal, but they can ask the seller to pay these costs.
Every purchase offer should include a set figure that the seller agrees to spend on repairs if required. This figure must be mentally deducted when the seller is looking at net proceeds. If more expensive repairs are needed buyers and sellers must either return to negotiations or let the transaction die.
On the buyer’s side, there are those closing costs, mortgage insurance fees, the first year’s homeowner’s insurance, and escrow reserves for property taxes and insurance.
But those aren’t the only factors that can affect the buyers’ or the sellers’ finances.
Timing can also play a role. If the buyer is leaving another home or the seller is buying a new home, the closing/possession date can save or cost them dollars. Think of the cost of putting your household furnishings into storage and renting a temporary shelter in the interim between closing on one home and moving into another.
If you’re the seller and you’ve already moved, think about the cost of making that monthly mortgage payment on a home you no longer occupy.
Next, look at what’s included in the purchase price. Kitchen and/or laundry appliances may already be included per the listing. If not, the buyers can ask for them. Inclusion saves the buyers money, while it may cost the sellers to replace them in their new home. So even though these items are not given monetary value on the purchase offer, they do have value that both parties do need to consider.
The same is true for items like a riding lawn mower or a hot tub. The seller may not need these in their next home, but leaving them behind does add value for the buyer.
Whether you’re buying or selling a home here in Pittsburg, ask your agent to go over the true costs with you, so instead of the purchase price, you can see the true price.
If you have questions about these costs and how they affect your bottom line, call me at (925) 219-8488 or drop me a note at firstname.lastname@example.org I’ll be happy to speak with you.
And, when you’re ready to buy or sell a Pittsburg home, it would be my pleasure to guide you through a smooth transaction.