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if you ever purchased or sold a property you know that there are all kinds of fees associated with buying and selling real estate these fees can add up to thousands of dollars so as an investor whether you're a wholesaling or fixing flipping it's critical you know and understand what these fees are so on today's video I'm gonna break it down for you as well as share some tips on how to save money on these fees coming up for a limited time you can get a free copy of Jerry Norton's QuickStart kit with everything you need to flip your first house in 30 days or less download it now at my quick start kit calm if you're new here to this channel I'm Jerry Norton love flipping master comm and this channel is all about ways to help you make money wholesaling and flipping real estate so you can live your dream life be sure to subscribe and turn on the bail notifications so you don't miss new videos having flipped in the thousands now properties during the past 15 years I've seen my fair share of closing statements and in almost every single case prior to closing both on the buy and sale side when I receive the settlement or closing statement there are fees that I should not be paying or are assessed incorrectly or can be negotiated down and by so doing I've been able to save thousands of dollars over the years which I'll be showing you how to do as well so keep watching but first as I like to do on these videos let me lay the groundwork first because real estate is governed at the state level each state handles real estate transactions differently and with each state certain fees may or may not apply and who is responsible for paying those fees between the buyer and the seller may also vary so on this video I'm gonna do my best to address all of these typical fees that you as a wholesaler and especially as a fixin flipper need to be aware of and who is typically responsible for paying them but ultimately it's your job to find out how it works in your state where you do deals keep in mind regardless of who typically is responsible for paying specific fees between the buyer and the seller remember the contract always supersedes your state's customary practices so for example as a wholesaler it's common to put in your contract with a seller that the buyer will pay all closing fees as a to the cellar so in that example because the contract states it the seller would not have any closing fees and the buyer would pay them of course as a wholesaler if you're doing an assignment those fees are passed on and paid by your cash buyer but if you're going to fix and flip the deal you would incur those additional fees when you purchase the property so not only do you need to learn what those fees are and who typically pays them between buyer and seller in your state but you also need to pay close attention to what the contract says in order for a real estate transaction to occur and ownership transfer from a seller to a buyer there is a settlement or closing company involved now the pending on the state this could be a title company escrow company or attorney and for simplicity on this video I'm gonna refer to this as the closing company and I'll refer to the person who handles the closing transaction as the closing agent now the closing agents job is to assess all of the fees when transferring ownership from a seller to a buyer and just prior to the closing date the closing agent will send both buyer and seller a closing statement outlining all of the fees to be paid at closing let's review them now but first remember this rule when it comes to closing fees always question every single fee when you buy and sell never assume the assess fees are correct or legit if you don't know what it is ask the closing agent to explain it to you you'd be surprised how many fees you shouldn't be paying all right let's go through the most common closing fees first is a title search and title insurance there are actually two types of title insurance the first is a homeowner's policy which covers the buyer from losses due to past errors and property records such as someone making a claim on ownership on the property or any other liens or encumbrances that may come forward from before the buyer purchased the property now this fee typically ranges from $500 to $1,000 and depending on the state is paid by either the buyer or the seller the second type of title insurance is if the buyer has a lender there will be a lenders title policy that is separate from the homeowners policy that provides the same protection but exclusively to the lender now this fusee ranges from 400 to 800 dollars and is typically paid by the buyer now depending on the state you may be subject to a deed or transfer tax this fee is usually a fee based on the sale price or fair market value of the property and again the cost varies by state for instance in New York State the D transfer tax is equal to two dollars for every 500 dollars in sale price that means a 250 thousand dollar sale will cost a thousand dollars in transfer tax now the percentage rate can also fluctuate based on the value bracket of a home for example in New York State there is an additional mansion tax which is 1% of the total price for homes over $1,000,000 that means the transfer tax on a 1 million dollar sale will be ten thousand dollars talk about taxing the rich so who pays the transfer tax in some states this seller pays the fee some states the buyer pays the fee and in some states is customary to split that fee between the buyer and the seller but again pay attention to what the contract says next let's talk about prorated property taxes one of the jobs of the closing agent is to figure out and reconcile property taxes basically what they do is from the date of closing they take the total annual property taxes and they split them between the buyer and the seller based on the number of days owned by each party so for example if the total annual property taxes are three thousand dollars and the closing happened exactly at the six month mark in the year the seller would be responsible for $1,500 and the buyer would be responsible for $1,500 where prorated taxes gets tricky is in some states taxes are paid going forward and in some states they're paid in arrears so at closing the seller could be getting reimbursed for taxes or the buyer could be paying taxes going forward and then hear it as a flipper just know that from when you buy the property - when you sell the property at the end of the day you'll have paid the prorated amount based on the number of days you own the property okay the next few will discuss is the closing fee or the settlement this is the fee that's paid to the closing company for handling the closing transaction now this fee usually is 400 to 500 dollars but it could be higher especially if you're in an attorney state and typically both buyer and seller pay a closing fee and this we can also be negotiated especially if you create a relationship with the closing company and you do repeat business I've been able to get that fee cut in half which adds up to thousands of dollars between purchase and sale closings over multiple deals and even if you're wholesaling it's wise to negotiate the closing fee down especially if you're doing a double closing since you'll be paying the closing fee and even if you're doing an assignment because it provides a benefit to your cash buyer okay next let's talk about real estate agent fees first is real estate Commission's now commissions will only apply if you're dealing with on market properties typically the listing agent representing the seller gets 3% of the sale price and the buyer's agent representing the buyer also gets 3% and most people are confused about who pays the Commission's almost always less although I stated the seller pays the Commission's even the buyer's agent commissions now think about it this way when a seller decides to sell his home on market he agrees to pay a total of 6% to get his house sold and the six percent is split between the listing agent and the buyer's agent so even though the buyer's agent is helping the buyer find and buy a home the seller pays those Commission's okay so how does this apply to you as a wholesaler and as a flipper well on the buy side it doesn't directly affect you because again this seller pays the Commission's but indirectly it does affect you because when considering your offer price the seller has to factor in paying 6% of sale price and commissions so as an investor when buying on market properties you can't really do anything about it but it is a fee that you need to be aware of that will impact the sellers decision when accepting your offer by the way most people don't realize you can get amazing deals on market now I did an entire video dedicated on how to dominate on market deals I'll put a link to that video in the description box below and you can watch it now here's where Commission's does come into play big-time when you fix and flip and you've renovated the home and it's time to resell it to a retail buyer you almost always will list it for sale with an agent and now since you're the seller you're responsible for paying the Commission's now I personally love using agents to sell my fix and flip properties but I don't follow the traditional 3% to the listing agent and 3% to the buyer's agent I actually pay the listing agent much less and I pay the buyer's agent more if you'd like to learn how I use agents to sell my flips I'll put a link to a video in the description box below or I break it down in detail ok moving along another real estate agent fee I want to mention is a broker fee now this is a few that I want you to watch for it can be anywhere from 295 395 495 it's low enough to not raise too much suspicion and I've seen it called all kinds of different things it's usually assessed to the buyer but I've seen it as well for the seller and it's unrelated to the Commission's when questioned the way this fee is usually explained is that it's a documentation storage fee for the broker to keep the files for like seven years now most people don't question it and they just pay it but if I ever see that fee on a closing statement I demand to have it removed next let's talk about loan fees this would apply to you if you're using financing to purchase the property whatever type of financing you're using it's important to ask upfront what all the fees are and get a detailed explanation it's very common to find all kinds of different fees that you weren't expecting on a closing statement and lenders have the most creative names for these fees including origination fees doc prep fees legal fees appraisal fees application fees and on and on now when I use a hard money lender I ask aside from points and interest what other fees do you charge then I ask about five more times are there any other fees that I need to be aware of ask to get a breakdown of those fees in writing and then when you receive the closing statement question all of the fees and make sure that they were disclosed to you upfront okay next let's talk about an optional fee but common nonetheless and that's a home warranty now generally speaking a home warranty is common for retail buyers and it provides coverage usually for one year for things like the water heater going out or if the furnace goes out etc and it typically cost between 350 to 600 dollars or so now as a flipper you won't buy a home warranty when you buy the property but strategically when I resell my flips I offer the new buyer to pay for and provide a home warranty and I found that since the buyer knows that you just fixed up the home this gives them peace of mind that they don't have to worry about anything not working or breaking and trust me it's worth five hundred dollars to pay that additional fee when you flip the house the next fee also relates to flipping on the resale of the property and that seller concessions now I could dedicate an entire video about this topic in fact maybe I will seller concession fees refer to money given from you the seller to the buyer at closing now this could be to help the buyer pay for down payment or closing costs for example FHA will allow up to 3% and seller concessions from the seller to the buyer concessions can also pay for appliances or moving expenses it could also be for additional repairs may be for things found on the inspection report now so the concessions do have to be approved by the lender but this can be strategic on your part as the seller for example let's say that a buyer is interested in my house for sale for a hundred and ninety nine thousand nine hundred dollars but they want appliances included in that case I'll tell the buyer to make me a full price offer and I'll give you a three thousand dollar seller concession so you can buy appliances now if you think about it a $200,000 offer with three thousand in concessions is the same as a hundred and ninety seven thousand dollar offer with no concessions just factor the concessions into the deal so those are some of the most common fees if there's a closing fee that I missed leave a comment and share it with me but finally let's take a minute and talk about how we budget for closing fees when flipping houses as a fixin flipper you'll pay closing fees when you buy and then again when you sell as I outlined on this video but most of the closing fees are on the sale side and if you look at the industry standard fix and flip formula we buy houses at 70 percent of after repair value or ARV less repairs that means we're taking thirty percent right off of the top now that 30% covers three things profit of fifteen percent of the ARV carrying costs or cost of money of six percent of ARV and then closing cost which we just talked about of nine percent of ARV that means for every fixin flipped deal we budget nine percent of ARV to cover all of the fees I just talked about in this video now if you don't budge it correctly and factor in these closing fees you'll be pretty disappointed at the end of your fix and flip Deal when you do the math and realize how much you paid in closing fees that ate into your profit and don't think you're off the hook if you're a wholesaler your cash buyer has to pay those fees too which means he or she has to factor those fees into the deal which means so do you as the wholesaler so that you bring good deals to your cash buyers now if you know me you know that I have a tool to help keep track of your closing fees it's just one of dozens of tools included in my flipster deal management system now if you've never heard of flip shirt it's a cloud-based house-flipping deal management platform that not only helps you organize you in and automate all of the steps to wholesaling and flipy analysis but it even helps you find and fund deals it's really cool to check it out and see it in action just go to get flipster calm and hey thanks for joining me on this video if you learned something new show some love hit that like button right now and leave a comment share with me your biggest takeaway from this video I'd love to hear from you and if you haven't yet be sure to subscribe to my channel I'm dedicated to helping you make more money and less time little sailing and flipping houses so you can live your dream life and I'll see you on the next video