The Texas Real Estate License Act requires that you be advised that there are agency relationships that govern how a real estate salesperson may deal with you when purchasing, selling or leasing real property. Before you enter into a substantive discussion with Cherokee Real Estate Company, Inc., or any other brokerage, be sure you have an agreement with the broker as to what your relationship with him will be and even how it may change from time to time. You should not disclose any personal information or disposition to a broker until you have established your relationship with him. The broker will be happy to discuss and explain agency relationships with you.

Real Estate Sale Closing Costs: Who Pays What?

Real estate sale transactions are quite a complicated production.  Unless you buy and sell real estate with some frequency, you will be blown away by the all the associated expenses.  For starters, there is no specific list of closing costs.  The principal ones will be covered here.  Second and, for the most part, there are no laws that say who pays the closing costs in a real estate transaction.  It boils down to what the buyer and seller agree to.  With respect to certain closing costs, there are traditions and customs that prevail in a Texas transaction and, in those cases, there are certain expenses that the buyer almost always pays and certain expenses that seller almost always pays.  A seller customarily pays a real estate commission if the property is listed with a broker.  He will pay for title insurance for the new owner.  In those rare instances where a buyer pays for his title insurance, he has the legal right to chose the title insurance company.   The cost of title insurance is based on the price of the property being sold.  The seller provides a warranty deed.  The seller provides tax certificates showing that taxes on the property are current or if there are back taxes due.  If the seller has to pay off a mortgage he bears the expense of the preparation of lien releases.  Sellers pay taxes owed on the property from the first of the year through the date of closing. 

A Buyer paying cash usually has few closing costs.  He pays to record the deed in the public records and will pay one half of the cost to close the sale.  If a buyer is getting a loan he can expect to pay for an appraisal, credit reports, loan origination fees, usually a survey if not going through a local lender, the preparation and recording of any documents pertaining to the loan.  He also has to provide title insurance for the lander, although lender’s title insurance is very inexpensive.  With respect to surveys and the purchase of unimproved land there is no clear custom as to who pays for a survey.  Whatever the buyer and seller agree to will be the controlling factor.  If a buyer plans on using a non local lender, such as an out-of-town mortgage broker or an Internet lender, the closing costs can be significantly higher.  Do not be fooled by the come-on ads that say “No closing costs”.  This just is not true.  Those costs will somehow be buried in the loan causing a higher effective interest rate.  If an FHA or VA (government-type loans) is involved, there are certain expenses associated with the purchase that federal law will not allow the buyer to pay and the seller will have to pay them.  What usually happens with this type of loan is that the price will be pushed back up to cover these expenses and the buyer pays them in the end through his mortgage payments.  Sometimes a buyer will not have money to cover closing costs and the costs will be tacked onto the purchase price of the property.  This mechanism can drastically increase the amount of interest a buyer pays over the life of the loan.  The reality is that a buyer with good credit will virtually always be better off looking for financing in his home town. 

Whenever a buyer and seller are transacting between themselves, they should have an attorney draw up a contract so that who pays for what does not become a point of contention at the closing table.  Banks and title companies will often require the parties to get a contract so that disputes do not happen at the closing table.