Avoid Overpaying On Closing Costs

Wholesaling houses continues to pick up steam, but many investors continue to be concerned that they are overpaying on closing costs. So how can wholesalers ensure that they aren’t being taken advantage of, and reduce real estate closing associated fees which can eat into profit margins?
There are many newer investors in the market today and few have much experience with closing costs and loan fees. Unfortunately some ‘professionals’ and vendors will take advantage of this, or at least charge as much as they are able to get away with.
So one of the best ways for those flipping houses to avoid getting cheated and to keep vendors honest is to always get multiple quotes for everything. This doesn’t mean going with the lowest bid is always best (bait and switch is still rampant today), but it will serve as a good barometer.
Everything in the real estate business is negotiable. Some may give bottom line, lowest they can do quotes up front, many others already build in some cushion for negotiating. You won’t know unless you ask. So request discounts. However, also know when to recognize value and valuable service and avoid beating partners up so badly they will find it more profitable no to close your transaction.
Investing and wholesaling out of the area is becoming more popular too and this can often lead to high loan associated closings costs on everything from origination fee to appraisals, title work and real estate agents fees. Get quotes on all of these.
Watch agents too. While many adhere to the strict Realtor code of ethics some have been caught charging new investors more than standard. Generally the seller pays all the commission in a sale. So if an agent asks for additional money this may be fat that should be trimmed. One exception here maybe dirt cheap foreclosures where agents may not otherwise feel it is worth getting involved or helping out, though there are clearly ways to make these acquisitions without their help.
Big or small deal mortgage loan fees and closing costs continue to make up a large chunk of gross revenues and can cut deep into profits. Those watching and inspired to jump into wholesaling houses by reality TV shows like Flip This House often aren’t aware of this.
A smart work around can be looking for legitimate methods of double closing or simply assigning or wholesaling contracts which can leave this money in the deal.

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Sean Terry is a Real Estate Investing Mogul that hosts the