These top 3 Real estate closing costs myths and misconceptions come up from time to time in real estate transactions. No matter how many times the Realtor explains things to the client, or has them sign in triplicate, the client still tends to hear what they want to hear. A home sale does not happen that often for most people, and there are many first time buyers getting into the market. For those who have never bought a home, or who have not sold one in a while, it is good to know where to separate fact from fiction, or just confusion.
Real Estate Closing Costs Myths #1
Buyers must pay to have a Realtor help them search for a home. This is FALSE. Under a buyer agency agreement, the Realtor will show buyers homes for a specified amount of time, or until a purchase is made. Realtors do this service without being paid any kind of showing fee by the buyer, their real estate company, or Multiple Listing Service. The Realtor makes nothing unless they find a home for the buyer, and the purchase is completed. There WILL be buyer closing costs associated with getting a home loan and transferring ownership from the seller to the buyer, but NOT to help with a home search.
Real Estate Closing Costs Myths #2
The buyer’s earnest money check will not be cashed until closing. This is also FALSE. The purpose of earnest money is to prove to the seller that the buyer is serious. In most cases, the earnest money check will be immediately deposited by the selling company once a home goes under contract. It will be credited back to the buyer at closing, so be sure funds are available for any checks written.
Real Estate Closing Costs Myths #3
Commission is split between the seller and the buyer. This is FALSE. The Seller pays ALL commission for their home. Whatever commission is being paid to close the sale of a home, is a cost to the SELLER ONLY. Commission is NOT A BUYER CLOSING COST. If the seller has agreed to pay any closing costs for the buyer, that will be in ADDITION to the commission on the sale. This will have been clearly shown on an estimated seller’s closing costs sheet that the seller signs, so sellers should expect to pay all commission on their home.
Hopefully, this clears up 3 of the most common real estate closing costs myths and misconceptions.
About the author Shannon Holmes is Birmingham, Alabama native and real estate expert. She has been interviewed by Bloomberg BusinessWeek for her strong knowledge of the market, and featured in international and corporate training for her internet expertise. The Shannon Holmes Team at RealtySouth specializes in working with buyers and sellers south of town in Mountain Brook, Vestavia Hills, Homewood, Hoover, Chelsea, Helena, and the Birmingham neighborhoods of the Highway 280 corridor. Reach Shannon at (205) 706-3975.