There are always closing costs when buying real estate. Most closing costs are related to the loan. There are origination fees and the buyer pays for the appraisal. In Minnesota, there is a mortgage registration tax. There is a fee for the buyer’s credit report and more.
Home buyers with financing will get a good faith estimate and will know what the closing costs will be. Generally, the buyer can expect to pay closing costs that will add up 3% of the sale price. Sometimes buyers ask the seller to help pay the closing costs.
When the buyer is paying cash they will still pay for title insurance, a closing fee, a title search, and a few more fees. Prorated taxes and HOA fees. There is no good faith estimate. The best way to find out what the closing costs will be is to get an estimate from the title company that will do the title work and the closing.
The closing costs for an all-cash offer are much lower than what they are when the purchase is being financed.
With a cash offer, the buyer needs to make sure they have enough cash to pay for the real estate and the closing costs. Asking the seller to pay the closing costs is exactly the same as paying less. Sellers do not like to pay the buyers closing costs.
When the purchase is being financed we understand that the buyer may not have enough cash for downpayment and closing costs.
People who are offering cash should get an estimate of what the closing costs will be and make sure that they have enough cash to buy the property and pay the closing costs.
Buying real estate always costs more than the sale price.