Real Estate Sellers have questions. So do Real Estate Buyers, that is why we do our best to address all concerns in our Buyers and Sellers Meetings – Consider it our Real estate Crash Course.
There are times when you are wanting to have other look at the paperwork produced. As you should. This was the volley from one such instance and we are glad that the points were made by the Prospective Seller’s Attorney. (probably not a real estate attorney – but an attorney, just the same).
The Black Bold text are the questions, the blue text are the responses.
1. As I stated in my previous Answer to you, the Transfer taxes are usually divided equally between Buyer and Seller. Just make sure that the $346 and the $1,417.50 represent only one-half of the transfer fees and not the entire amount of the Transfer Taxes/Fees;
All documentary transfer taxes are customarily paid for by the seller of a property. Documentary transfer taxes are due whenever a grant deed is recorded due to a transfer of title on a property and are based on the sales price of the property.
-The county documentary transfer tax paid to the County of Los Angeles is charged at $1.10 per thousand.
-The city documentary transfer tax paid to the City of Los Angeles is charges at $4.50 per thousand.
2. Pest/Termite Report is acceptable and must be provided by the Seller;
Pest control report and Section 1 items are standardly paid by the seller. Section 2 items are standardly paid for by the buyer.
3. If the Buyer wants a Home Warranty, he should be paying it. You as the Seller have no legal obligation to warranty anything, I am sure that when you purchased the property, you had to pay for any warranty you chose to buy;
Sellers generally pay for the home warranty plan because it is such a small cost to pay to avoid potential future litigation for property issues that arise after an escrow closes and that may not have been disclosed on the transfer disclosure statement. The coverage includes the majority of the small and large items that can go wrong at the property including the air conditioning and heating units that cost big bucks to repair and/or replace. The home warranty plan covers the buyer from the moment they take possession of the property through the first year of ownership.
4. I do not know who First American Natural Hazard, or who Pit Bowl Retrofitters are, or what services they would be providing to you as the Seller shich would warrant a payment to them of $150 and $555.00, respectively, and you should question these charges also; Payments to the municipal and County authorities is nominal and they are probably valid charges;
-First American NHD is one of the few companies that are compliant with the seller’s required disclosures that must be provided to the buyer in every real estate transaction. The report is prepared by a company licensed to prepare the report and covers anything and everything that you would ever need to know about a property. Earthquake fault lines, high fire areas, wildlife, flood zones, soil liquefaction and inpaction, etc.
-Pit Bowl Retro-fitters is a company that can be hired to complete the required property retrofit inspection on the property. The cost of the inspection is $55.00 and includes the cost of the Certificate of Compliance that must be filed on all properties transferred in the City of Los Angeles. The retrofitter must inspect the property to see that there are low flush toilets, low flow showerheads, impact glazing on the windows, earthquake shot off valves at the property, some detectors and carbon monoxide detectors installed at the property. If any of these items are not compliant you can hire them or any other company to handle the installation of the City Ordinance required items prior to the transfer of the property taking place.
Note: The estimated statement provided to you was based on a recent sale of a neighboring property that had about $500.00 worth of required retrofit work to be done.
5. What is the HOA doing fior you that would warrant a payment to them of $350 ? Is this a charge for simply marking their records to reflect a new owner of your unit? If so, tell them to give you a pen and you will be glad to write in the name of the Buyer, but you have no intention of paying them $350 to do so;
All HOA management companies charged for an HOA document package as well as an HOA transfer fee. This $350.00 is just an estimate and can be more or less than this. There is no option to not pay them for their required fees per their demand that will be issued and deposited into escrow. Escrow can not close without making payment for these two items as well and providing payment for any outstanding and/or delinquent HOA dues and fees.
6. Under “Payoff 1, the only valid charge and which I had stated in my previous Ansswer to you is the payoff of your mortgage loan so that the Buyer’s lender had a first lien on the property. You must ask for an explanation and contest rest of the charges in that section because they sound like nonsense; If you have been making payments to your lender when due, this amount of interest may or may not be due. Ask how, and on what amount, this was calculated;
The payoff section shown on the estimate provides for the amount that you stated was your approximate unpaid principal balance of the loan. In addition, when you make a monthly payment you are paying principal for the month you are in and interest for the previous month. All interest when you make a payment is for 30 days in arrears. So, if you close escrow on December 15th you will owe interest for all of November and approximately 17 days in December (15 days in December plus two days for posting purposes by your bank). The miscellaneous little fees charged are all actual charges in that section and you agreed to them when you signed your Deed of Trust at the time of obtaining the loan.
NOTE: Again…this is only an estimate and you interest due will be adjusted to the actual amount due per the written demand statement ordered by escrow after escrow is open.
7. If you agreed to pay a commission to the listing agent and another real estate office sold the property, then the listing agent should be paying the selling broker a commission out of their listing commission. However, I did the calculation and the $15,750 amounts to 5% of the selling price which is reasonable. However, review the listing agreement you signed to determine who woukld pay the selling broker, you, or the listing agent.
I have no idea what this statement is asking. However, if you agreed to pay a 5% commission, escrow will handle the commission split and the payment of the 5% commission between the listing and selling agents accordingly.
– I have this one. On the Listing Contract – there are two areas. One for Total Commission to be paid to the Realtors – then another place that has the amount of compensation to be offered to the agent that is bringing the buyer.
8. Ask for an explanation of $830, $175, and $200 – What escrow ? What Documents are being prepared for you ? What is Demand Processing ? And, “Overnight Mail” does not cost $75
-The base escrow fee is based on the sales price of your unit. We charge a $200.00 base plus $2.00 per thousand as your base escrow fee.
-The document fee is a grouping of fees. It covers the preparation of all seller’s documents needed to convey title to the property and the storage fee for the file over the next 5 years.
-The demand fees cover the cost of ordering all demands needed in connection with this property. So, in this case you have a loan that we have to order the demands for and the HOA demands that we have to order. In most cases, depending on the length of your escrow process, we will need to order each demand twice.
-Actually, overnight mail does run about this much when an HOA is involved and often times it can be more. I just tend to place a cap on these fees because many of the overnight companies charge so much for their services and will only use federal express which is extremely expensive. There will be at least three overnight/messenger fees incurred in this transaction that I know about so far. They are as follows: The escrow opening package, the escrow closing package, the overnight package for the upfront HOA required fee because the HOA won’t even prepare the HOA document package until they get upfront money from escrow, then the overnight fee from the HOA back to us with the HOA document package.
9. As I stated before, title insurance benefits the Buyer and it is the Buyer who has the obligation to pay these amounts;
Wrong…standard in the industry is as follows:
-It is the seller’s responsibility to provide the buyer with the new owner’s title insurance policy.
-It is the buyer’s responsibility to provide their new lender with the lender’s policy of title insurance.
10. Sub Escrow Fee ? Wire Fee ? All nonsense!
-The sub escrow fee is the title company’s charge for handling all funds and making all payoffs in connection with a real estate transaction. The cost of this charge is generally under $200.00 and is split between the buyer and the seller. Again…this is just an estimated closing statement.
-The wire fees are what the title company charges if your lender requires the funds to be wired to them. If not, an overnight fee will be charged in place of the wire fee.
Again…these are just an estimate and the actual price of the wire cannot be determined until the demand is obtained from the seller’s lender of record.