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Closing Costs vs. Costs of selling homes

Submitted by johnshelton on 5 February 2010 - 8:32pm

I'm trying to understand the difference between "closing costs" in the Primary Home folder, and "Costs of selling homes" in the Economic Assumptions folder.

I think I may double counting costs, here.

‹ Why doesn't Home Value remain constant in today's dollars? Mortgage payment does not decrease with inflation ›
Submitted by Dick Munroe on 6 February 2010 - 7:14am.
1

The "Cost of selling home" is the percentage you pay for the privilege of using a broker (commission). Not a particularly good choice of words, but space is limited. Closing costs are additional charges by banks, lawyers and the other riff-raff that bounce around real estate deals.

Best,

Dick Munroe

Submitted by johnshelton on 8 February 2010 - 1:54pm.
2

So, if the value on "costs of selling home" is 4.5, then it is 4.5 what? 4.5 percent of the mortgage amount (i.e., points)? 4.5 percent of the value of the new home?

In California, I think the value is typically 1 percent of the mortgage amount, due to our large mortages.

Is this 4.5 considered to be financed (i.e., added to the mortgage amount) or is this spending during the year of the purchase?

I'm pretty sure in California, this is really covered by setting the "mortgage interest rate" (i.e., commissions are normally hidden inside this value, by inflating the interest rate).

Submitted by johnshelton on 9 February 2010 - 4:14pm.
3

Never mind. You mean the Real Estate broker - not the mortgage broker. Got it. 4.5 is quite reasonable, then, as an estimate.

Submitted by Dick Munroe on 9 February 2010 - 5:01pm.
4

Yes. The cost of selling home is in %s. I think the closing costs is in $s but I would have to look.

Best,

Dick Munroe

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