Posts made in March 2015

Closing Costs Are a Mystery

Most weeks, I glance through the Sunday newspaper just to see what the “mainstream media” is talking about.  This past Sunday the Indianapolis Star (courtesy of USA Today) carried an article titled, “Closing Costs Are a Mystery to Millennials.”  Based on my experience in the real world, I’d agree and extend that to most everyone else too.  The article was right though, as most first time home buyers have no idea that they not only have to come up with enough cash for a down payment, but for closing costs as well.

When most first time buyers think of closing costs, they think in hundreds, when in fact, closing costs typically run more like $4000 on the average deal.  These costs are tightly regulated.  (If health care costs were this tightly regulated, your health insurance premium would be about a quarter of what they are now.)  Because they are tightly regulated there isn’t a great deal of difference from one lender to another.  The costs tend to run in a fairly narrow range.  Many of the costs are fixed, meaning they don’t change much from one deal to another.  A cost for an appraisal, title search, credit report, county recording fees, etc. doesn’t change whether someone is buying a $50,000 house or a $400,000 house.  And most of the variable costs aren’t determined by the lender you choose- think homeowners insurance, title insurance, real estate taxes, PMI, and homeowners association dues.  All of these costs are determined by some entity other than your lender (and aren’t affected by your choice of lender either).

Because of the variable costs, closing costs do go up as the price of a home goes up.  But, even the least expensive of homes is going to have closing costs running in excess of $3000.  And the average priced house is likely to have net closing costs in the $4-5,000 range.  Buyers need to plan accordingly.  Now, there is one strategy that can come to the rescue of buyers with just enough cash for a down payment, and that is to negotiate to have the seller pay the buyer’s closing costs.  There are some pro’s and con’s to this strategy, and they depend on one’s unique individual situation.  This is something that I review with buyers as they put their home buying plan together.  Let’s talk and be sure to take the mystery out of closing costs!

New Numbers Just In

February sales activity numbers were just released today by MIBOR, the Metropolitan Indianapolis Board of Realtors.  Board activity encompasses 26 counties in central Indiana, with the bulk of the activity coming in Marion and adjacent counties.

February sales totalled 1,810; which was a healthy 13% increase over last February.  However, the 12 month numbers have been running about on par with last year’s.

New listings kept pace with the increase in sales, keeping the inventory of homes currently for sale at close to 11,000.

One number that is always of interest is the actual selling price versus the asking price.  And the answer is… On average, homes are selling for 92-93% of their original asking price— meaning that the average 100,000 house is selling for about $92,500.  If you need help sorting out the good deals from the bad- call me.

Megan’s Law

Earlier today a prospective buyer asked me about sex offenders in the neighborhood.  Now, some neighborhood information is obvious- all you have to do is open you eyes.  Other stuff, is not so easy to determine.  However, the web does provide a wealth of available information that can easily be tapped to discover all kinds of info about any given neighborhood or area.

“Megan’s Law” provides for a public database of the last known whereabouts of sex offenders.  The law requires convicted sex offenders to register their residency with local law enforcement officials.  This information is then available to the general public.  While this information does not get updated as would be most desirable, it nevertheless provides the best available information available about who your new neighbors might or might not be.  If this is something that concerns you, it might make good sense to check out the local listing.