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    What is Involved in a Real Estate Transaction?

    403 Warren Normal IL 61761If you’ve never purchased a home before, you may not realize that there are costs during the transaction other than just the cost of the home itself. Not educating yourself as a buyer is a mistake that is often made. The staff at BN Realty is here to help buyers understand just what goes into a real estate transaction and who is responsible for paying what. We hope that this article better prepares you as you get near one of the most exciting times in your life, the day you close on your new home! The following are two lists of the most common fees associated with real estate purchases.

    The following costs are typical for the seller to cover:

    • Commissions – generally the biggest expense of the transaction. The seller pays a percent of the sale price based on a contractual agreement. Both the seller’s and buyer’s agent are paid by the seller.
    • Escrow/attorney fees – these are generally split between buyer and seller. Each party would be responsible for their portion/the cost of their individual attorney.
    • Transfer taxes – paid to the city, county and/or state by the seller.
    • Settlement/closing fee – can also be split between the buyer and seller. These fees would pay the escrow company, bank or other financial institution handling the sale.
    • Home warranty – negotiated by the buyer’s agent. The seller would pay this fee to help protect the buyer from damages for 6 months, a year or more.
    • Credits agreed on for repairs – there are sometimes credits negotiated into the transaction. These may include an amount of money to replace carpet, replace the roof, or other substantial costs that the buyer will run into when moving into the new home.

    Buyers will be responsible for the other costs such as the following:

    • Bank processing fees – these would be based on the bank that the buyer’s mortgage is handled through.
    • Escrow/attorney fees – these are generally split between buyer and seller. Each party would be responsible for their portion/the cost of their individual attorney.
    • Appraisal and origination fees – due to the bank for their work in preparing the loan for the buyer.
    • Prepaid insurance – required by financial institutions before ownership is taken of the new home. Proof of payment will be shown at closing.
    • Credit report fee – sometimes banks will charge a fee to the buyer to run a full credit report before approving the buyer for a mortgage.
    • Title insurance – paid for by the buyer to help protect the lender in the case of leins or other issue with the property.
    • Inspection fees – typically required by the bank before closing. This can be paid directly to an inspector or paid to the lender at closing and then transferred to the inspector.

    These lists are meant to be a guide, and are not all inclusive. There are ways to negotiate who pays for certain parts of the transaction just as you negotiated the price of your home. Remember, there is no better way to figure out what costs you are responsible for, than by asking your real estate professional. Let’s get together right away if you have any questions at all! Call us today at 309-319-6030.

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