A lot of people ask me the question How much money should I save for Closing Costs? When negotiating an offer on a home, you can ask for a particular amount or percent towards the buyer’s non-recurring closing costs. This may work on a bank owned home best, but depending on the condition of the home and what amount you are offering for the home I like to put in a reasonable amount to help the buyers with their closing costs. For instance: There was a deal for a home for which I wrote the offer at $330,000 with 20% down = $66,000 + 3% closing =$9,900. We wrote in asking for up to 3% toward non-recurring closing costs and after the third offer on this bank owned home in Whittier, CA in relatively bad condition the bank (the seller) agreed to pay the buyers closing costs. This included their title, termite and escrow fees. It came to about $8,500. The buyers still had other closing fees they paid when purchasing a home such as their loan fees and home insurance, home warranty fees, etc. They had more than the amount to cover these closing costs when they made the offer to show strength as buyers. This fact helped them by showing the bank (seller) that they were strong buyers and understood the fact that the home needed repairs and that banks DO NOT MAKE REPAIRS. The buyers were savvy enough to listen and follow my professional experience and direction. It took 3 offers to win the bid but they are now fixing it up and living in the home which recent comparable sales show that they have equity of $120,000. Now, they put in about $70,000 in repairs so minus that from the 120k and they are sitting on some nice equity in a very nice situation. Close of escrow was April of 2010.
Depending on your down payment amount towards a $700,000 mortgage about you would want to have at least 3% which totals $21,000.00. This is only for closing not toward the down payment. A 10% down payment on a $700,000 offer would be $70,000, or 15% totals $105,000.