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Who pays the closing cost? - http://www.dealmakerscafe.com Forums

Original message

Kilwanna

"Who pays the closing cost?" , Wed 4 Apr 00:12

Hi,

How is everyone's week? Good I hope. Well , I was posting this question to find out, in flipping property when you are assigning your contract over to another investor who pays the closing cost? Myself or the other investor? Now,this is totally a new question? When you're doing assignments and assigning the contract over to another investor, how do you decide on how much you are planning on getting back at the close without trying to be greedy? I was told that if you get a house that has a FMV of $100,000 and assumed for sake of argument no repairs and you offered $65,000, you could then sell it for anything between the two prices and make your money at closing. Then I was told if I flip to an investor, I am basically selling for maybe 2-10k above my agreed price. This builds in room for the investor to make money. So can anyone explain to me what this all means because this was e-mailed told me from another discussion forum and website which is where this information came from. I am a newbie and I would love you alls advice and answers. I thank you all very much.

Kilwanna
Sorry if this posting is rather long. But thanks.

Kilwanna Williams

Replies:

Lynn
Moderator

"Re(1):Who pays the closing cost?" , Sun 8 Apr 15:32

It's all negotiable. If you are doing a double closing you will actually have "two" sets of closing costs. Best case scenario would be that you get your seller to agree to pay closing costs of the first closing and you negotiate with your buyer to pay the closing costs of the second closing. This way you have ZERO closing costs.

If you are actually "assigning" the contract then the investor that is buying the contract from you will be obligated to pay whatever closing costs you negotiated with the seller.

quote:
Then I was told if I flip to an investor, I am basically selling for maybe 2-10k above my agreed price. This builds in room for the investor to make money.

If flipping to another investor, you don't base your selling price (to the investor) on your "agreed price". You should cultivate relationships with these investors that you intend to flip to and find out what their criteria is. For instance, let's suppose I told you that I would pay 75% of fair market value on any house in XYZ neighborhood. Whatever you negotiate below the 75% level would be your profit. If you negotiate a purchase contract at 50% of FMV and the house is worth $100K then you would be able to make $25K. If you negotiate a purchase at 70% then you would be able to make $5K. You see I can care less what you paid for a house. I don't even care if they just gave it to you, as long as I can get it at 75%. Most professional investors will feel this way.

If you have a potential of a really large profit, you should consider doing a double closing. This way your buyer doesn't realize how much you are making on the deal and they are not as likely to try to negotiate you down, or to go behind your back.

If you only stand to make a couple of thousand then an assignment is fine.

Hope this helps!

Happy Investing!
Lynn

Knowledge is important but all the knowledge in the world is worthless without action! How many offers did "you" make today?

Ben
Moderator

"Re(1):Who pays the closing cost?" , Wed 4 Apr 09:28

Kilwanna,

1st question: Whoever is told to pay closing. I always let my buyers pay. Put that in the purchase agreement.

2nd question: Never get too greedy and ruin the deal. Most investors want to get a good deal. You should get on a typical deal a few thousand.

Ben
Moderator
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