What Are Closing Costs?

There are lots of things that need to be taken into account when you are planning to buy or sell a property. One of those things is known as closing costs. It’s something that first-time buyers may not be aware is required. And seasoned buyers and sellers may not realize can vary greatly from state to state.

Closing costs come from a variety of fees and often overlooked expenses. So what are these closing costs?

There are lots of factors that need to be taken into account when it comes to closing costs. These can include inspections, loan fees, government recording charges, and title charges. These costs are generally covered by the buyer, although there are also instances in which the buyer can ask the seller to cover some part of the closing cost fees.

To help provide you with a clearer picture of closing costs, we will go into more detail.

Real Estate Closing Costs
pen and glasses on closing cost documents

Closing costs can change according to the area and the type of transaction performed. However, in general, the things that comprise closing costs are:

• The cost of conducting surveys
• Inspection services fee
• Appraisal services fee
• Title search fees
• Title insurance
• Closing service (including notary closing services)
• Courier and Funds transfer/wire fees
• Loan origination fees
• Assessments
• Payoffs of unresolved liens and taxes
• Mortgage and deed preparation costs
• Document Recording Fee (including electronic recordings, or “eRecordings”)
• Other

Buyer’s Fees

In general, the majority of the fees included in closing costs are part of the buyer’s deal. This is why buyers generally have to take responsibility for the payment of closing costs.

Closing costs vary according to the state, type of agency, and transaction. All buyers should acquire an estimate of the closing cost fees they are liable to pay to avoid surprises at the end of the deal. Lenders are required by law to give you this, also known as a GFE (good faith estimate).

Seller’s Fees

When it comes to sellers fees, they don’t have to worry about closing costs as much as the buyer. The only thing they will be required to do is take care of the loan payoff costs, agent’s commission, associated penalties, notary fees, homeowner association fees, and transfer taxes.

Payment Options

When it comes to closing costs, the majority of the fees fall upon the buyer. These are the ones who usually have to decide how to pay it. They can choose to pay it outright through wire transfer or with a cashier’s check. They can also choose to negotiate with the seller to cover some part of the costs in a sale. Also, some lenders offer loans with the closing costs rolled into the mortgage. This option will almost always cost the buyer more in the long run, as they will end up paying interest on these items.

Many buyers and sellers are confused about the closing costs and the types of fees included in them. If you face any confusion, you should never hesitate to ask your mortgage broker or your real estate agent to explain any fees to you.

Lake Home Buyers – Try Before You Buy

Estimated reading time: 4 minutes

Couple viewing a lakefront house for sale with scenic lake backdrop

Some purchases in life require a trial run before committing, whether it’s cars, mattresses, or lake properties. The latter is often one of the most significant investments you’ll make and while the appeal of a laid-back, lakeside life is enticing, there can be unexpected challenges depending on where you buy.

To ensure your property investment is the right fit, experience the local lake lifestyle before taking the plunge into lake home ownership.

Every Side Has Its Story

Photo courtesy of Toby Hall on Unsplash

Just as people differ, lakes have unique personalities, and even different parts of the same lake can vary drastically. For example, one end of the lake might be quiet, secluded, and primarily occupied by adults, while its opposite end is a party cove bustling with energy.

Where you choose to buy depends on the lifestyle you desire and your intended uses for the property.

If your main reason for buying a lake home is to enjoy a quiet morning coffee on your dock or watch the grandchildren swim, find a location with minimal boat traffic and safe swimming conditions.

However, if you’re looking for the best water for watersports and activities, consider areas with deep water and open space for smooth, wide turns. Proximity to a marina is also crucial since watersports typically consume more fuel than leisurely cruises. 

Peak Season vs. Off-Season

Most lake lovers and prospective lake homeowners understand what lake life is like during the summer, but what about when the air turns cold and the boats are safely stored?

Among the many reasons lakes are superior to beaches is that, unlike beach towns, lake towns don’t completely shut down during the off-season. On some lakes, the towns surrounding them bustle with the same energy no matter the season. On others, marinas close, restaurants shut down and residents fly the coop until the next year.

Additionally, some lakes, like Alabama’s Logan Martin Lake, experience seasonal drops in water levels. This lake is lowered by about five feet in the winter, only to return to full pool from May to October. These controlled water level changes help manage seasonal rainfall, but low water levels during the off-season can potentially damage docks and bulkheads or leave boats and other watercraft grounded.

Visiting your prospective lake home during the off-season lets you understand how the area operates when the tourists leave, providing a fuller picture of year-round living.

Try the Food, Map Out the Amenities

Part of the appeal of living at the lake is being outdoors, not being cooped up in the kitchen. Grilling is great, but every night? Even when you plan to cook most of your meals at home, you will want to dine out occasionally. Before committing to your lake home, explore the local cuisine scene.

Also, be sure to map out the proximity to essential locations such as gas stations, grocery stores, and hospitals. Lake living goes beyond the house and the boat; it’s about the overall lake experience.

If you think you’re ready to dive in, be sure not to do it blindly and give the lake lifestyle a try before you buy.

Whiteboard Topics: 3 Reasons Why Fall and Winter Are a Great Time to Buy a Lake Home

Now that fall is officially here and winter is approaching,  Lake Homes Realty’s CEO, Glenn Phillips, explains why now is the best time to purchase your dream lake home!

1. Summer Enthusiasm Has Faded: Now that summer has ended, the initial wave of enthusiasm has worn off. This will prompt more homeowners to list their lake homes.

2. Winter Water Levels: You’ll get insight into the water levels of the lake during the fall and winter seasons. Seeing it firsthand can make all the difference.

3. What is Open Year-Round: You can see how active this lake is during the fall/winter seasons. Are shops and restaurants still open? Are events still happening?

Although the fall/winter is typically considered the ‘off-season’ for lake homes, it may be the perfect time to buy one. Visualizing your dream lake home setting in every season can help you make the right purchase!

Whiteboard Topics: 5 Common “Buyer’s Remorse” Issues to Avoid

Home buyer’s remorse is very real, but can be avoided when you’ve done your research. Lake Homes Realty’s CEO, Glenn Phillips, introduces five factors to consider before purchasing your lake home to prevent buyer’s remorse!
  1. Relying on Appearances: This can lead to miscommunication and disappointment. For example, the placement of a fence isn’t always a great identifier of a property line.
  2. Assuming HOA Rules: The rules of every lake association differ per lake, so it’s important to stay updated on the current rules in place.
  3. Assuming Shoreline Usage: These rules also differ per lake. Just because you see others with a pier or dock, doesn’t mean you have the right to build one. 
  4. Ignoring Flood Insurance: Flood insurance should not be ignored or taken lightly. The benefits outweigh the cost, but you must take the added expense into account.
  5. Grossly Overpaying: The market is extremely hot right now, but that doesn’t mean you should pay extreme prices because of the rising demand.
You should have the confidence to buy your dream lake home with no regrets. Buyer’s remorse can be prevented when you know what you’re getting yourself into. Do your research!

Whiteboard Topics: 4 Tips for Leveraging Backup Offers for Lake Home Buying

When buying a lake home, it’s important to put yourself in the best position. This means understanding the market, or working with an agent who does. Lake Homes Realty’s CEO, Glenn Phillips gives four tips for leveraging backup offers for lake home buying.

  1. Patience: Being in a hurry to buy a lake home can damage the chances of a purchase being made. Leveraging backup offers means waiting for an offer to fall through.
  2. Add Contingencies: Ensuring a higher quality offer with contingencies can 
  3. Don’t Ask, Just Submit: Instead of waiting while more offers can be made, submitting your offer can put you in the best position.
  4. No Guarantees: While an offer may seem perfect, nothing is guaranteed.

Selling your lake home doesn’t have to be difficult. Set yourself up for success and work with an agent who knows not only your lake area but the lake house market!  

Tips for Buying a Fixer-Upper

Photo by Tierra Mallorca on Unsplash

Finding your dream lake home isn’t easy. Sometimes, you’ll have to sacrifice certain “nice-to-haves” for the sake of securing your “non-negotiable” qualities in a lake home. However, the solution to attaining your dream home might be to create aspects of it yourself. Investing in a fixer-upper can be an excellent opportunity to customize a home to your liking and increase your return on investment for an eventual sale. Plus, there are plenty of DIY solutions to fixing up a property. Check out these insider tips on buying a fixer-upper lake home from real estate experts across the country.

Know Your Numbers

 Photo courtesy of @beachbumledford via Twenty20

Whether it’s a lake property or a residential home, every buyer should know their numbers. “Run your flip like a business — because it is!” says Charlie Mackey, director of investment solutions at Sundae. “Start with the 70% rule. You should not pay more than 70% of the After Repair Value (ARV) of a property or what the house can be sold for after completing all work and renovations. Think of this number as a starting point.” 

Knowing your numbers can help eliminate any cost surprises in the long run. It can also help you decide if a property is worth the money. “You’ll never be 100%, but you can be as close as possible,” says Bill Samuel, a residential real estate developer who specializes in rehabbing and selling houses. “Know what your total development cost will be at the end of the day. The most important thing is: what’s the property going to be worth when you finish, and is that number versus your total cost worth it?”

Look for the Bones

When you’re buying a fixer-upper, it’s not the inside that counts — it’s the structure. You’ll be renovating the interior, but you want to make sure the overall frame of the home is sound. “Look for the bones,” says real estate expert Steve Laret. “Look at the dock, pilings, roof, walls, the stuff that isn’t ‘sexy money’ to spend.” If everything on the outside of the home is intact, including the electrical wiring, plumbing, and a termite inspection, then you can spend your money on aesthetics alone. “Run away from a place that needs a new roof, tons of tree work, or is completely shaded. They are not going to return your investment,” he says.

Invite a Contractor

Photo courtesy of Inman.com

These days, buyers are savvier than ever. However, it doesn’t hurt to get a second opinion — especially one who’s an expert. “Don’t be afraid to have a contractor walk a property with you,” says Henry Washington, a real estate investor who specializes in buying and renovating homes. “A lot of times, people THINK they know how much a renovation will cost, but they don’t actually know. The expense of fixing foundations can be cheap or expensive, and it’s hard for an expert to know the difference. Have a professional give you a quote.” 

In particular, a contractor may help you search for things like cracks in the walls that you might not notice. These could indicate a problem in your home’s foundation, and you may want to offer less for the property. 

A contractor can also offer insight into the home’s electrical wiring. “If you’re not experienced with doing a lot of construction, stick to a house that wasn’t built over 100 years ago because you’re going to wind up with way too many surprises,” says Samuel. This is because 100 years ago, there were no building codes for electricity. 

If your house is too old and is not up to code, you will be responsible for the costly fees of updating the wiring if you were to open a wall. Bringing a contractor on-site could help you catch things like this — the little things that come with a hefty price tag.

Seek ROI Opportunities

Photo courtesy of aabsys/iStock via Realtor.com

After buying a fixer-upper, you’re going to be doing a lot of the work. Be prepared by knowing what you’re working with and looking for the home’s potential rather than evaluating it based on its current state.
For lake houses, adding bedrooms means adding value because you will be paid more whenever you rent it out or if you want to sell it one day. “Look for places where the square footage and the number of bedrooms don’t add up,” says Washington. “That means that you can add a bedroom and still have a great-sized home.”
At a lake house, you may also want to take down trees to increase the lake view. However, this can be expensive, as Laret warns. It may be a better idea to consider other ways to let light into your home, such as changing the window treatments.

Hire a Lake Agent

Photo courtesy of Getty Images via Forbes Advisor

Finally, when buying a fixer-upper on lakefront property, be sure to hire a lake-focused real estate agent. “Hire someone locally who knows all the nuances of the lake market,” Samuel says. “Know what the water quality is like, and other important factors about that lake. The more information you have, the better your decision will be.” At Lake Homes Realty, our lake agents have both local and national expertise and can help you find the property and lake area that’s right for you.

Whiteboard Topics: 4 Ways to Help Your Real Estate Agent in 2021

While real estate agents are here to help you with your lake home, there are some things you can do to make the process easier. Here are four tips to help the real estate transaction go smoothly for you and your agent.

  1. Accept the consequences. Be sure you understand that the lake market is a hot market in 2021. It’s different from other markets and knowing the nuances are important to be successful in the process.
  2. Do your homework. Agents will help you and answer your questions, but you have to know what to ask. Educating yourself and working with an expert agent will keep you out of trouble.
  3. Expert agent. Whether you’re buying or selling, working with a lake expert agent will help you navigate the nuances of each lake. The rules and regulations for each market can be different, so having someone who can guide you through those will help meet your expectations.
  4. Be prepared to buy. Do the prep work to make a thoughtful and competitive offer in a timely manner. You snooze, you lose!

Whether you’re buying or selling your lake home or property, our agents at Lake Homes Realty can help provide insight into today’s lake real estate market and guide you in your home journey.

Whiteboard Topics: 5 Questions First-Time Lake Home Buyers Should Ask

Are you thinking of buying your first lake home? Buying a lake home is unlike buying any other home so here are 5 important questions to ask when you know you are ready to buy.

  1. Dock Regulations? The rules and regulations on what you can and cannot do to a dock will vary from lake to lake. Some might not allow the existing docks to be modified. Before you decide to build one or fix up an existing dock, be sure you understand the regulations.
  2. Internet Access? Most people often think that the internet is widely accessible, but this is not always the case with lake homes. Sometimes houses on the lake are located in secluded, rural areas where internet access is not always readily available.
  3. Water Levels? Water levels vary on different lakes. Some lakes could have water levels that vary from day to day while some are seasonal. For instance, a lake might be at full capacity in the summertime and be completely dry in the winter.
  4. Boat Traffic? You might not realize that your ideal lake home is situated on an area of the lake that has high traffic. The buzzing of passersby might be appealing for some but if you’re looking for a more tranquil setting, an area with high boat traffic might not be a good fit for you.
  5. Grocery Store DRIVE Time? How long does it take to get to the nearest grocery store? Always calculate the time and not the distance because the shortest distance does not always equate to the fastest time and vice versa.

If you’re ready to make your very first lake home purchase, be sure to contact our lake experts to help guide you on this special journey.

Whiteboard Topics: 4 Gotta Haves to Consider When Buying a Lake Home

When you are considering buying a lake home, particularly in a rural area, here are 4 “Gotta Haves” you will have to keep in mind.

  1. Cell Signal
  2. Internet Access
  3. Television Service
  4. 24-Hour Emergency Room

There might be hundreds of miles of lake shoreline, one side of the lake might have these services while the other side might not. Also, the terrain of the lake areas might determine the availability of these services as well.

Our knowledgeable agents are here to help you answer these questions and assist you in your lake home-buying journey.