James Campbell

Buyer Guide
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Downpayment & Closing Costs

When buying real estate in addition to the downpayment, there are also closing costs. The combination of your downpayment and closing costs is the total amount of cash required to close the deal.

What is the average size downpayment?

20% Down.

What if I don’t have a 20% downpayment?

If you don’t have 20% then maybe ask your parents or a family member for help. For many first time buyers saving up the down payment is the hardest part. There are many loan options from 10% 5% – 3.% with an FHA Loan and 0% down for VA loans. The lower the downpayment, the higher the mortgage balance and higher mortgage payment. I recommend putting 20% down if you can, it also avoids PMI

What is the typical closing costs for the buyer?

The average closing costs for the buyer are 2%-3% of the purchase price as a rough rule of thumb. The biggest buyer side closing costs is the loan, so if the purchase is all cash your closing costs may be as little as 1%.

Do buyers pay the broker commission?

Buyers often ask if they pay for the buyer’s agent real estate commission. The answer is no.

Buyers don’t pay the agent commission, the seller does. This is great for you as a buyer because it lowers the amount of cash you need to buy a property, but keep in mind you will have to pay both commissions when you sell. I say that it averages out to half a commission each transaction, but it is loaded on the backend. If you never sell, you never pay.

With some deals, if you are running short on cash, and it’s a slow market, you may be able to work out a deal with the seller to help pay for your closing costs. Don’t expect to get any concessions on balanced or seller’s markets.

At closing, Escrow prepares a closing statement, which is all the actual closing costs.

How many homes do I need to see before buying one?

The average home buyer looks at 20 to 30 homes in their home search before buying one. If you are lucky and find the perfect home right away I have sold homes with one showing. When you know you know. For some buyers who have very specific criteria or in competition markets – the home search can last a year or two and they might need to see 100 or more homes. 

How am I supposed to work with an agent?

Today you can search for listing for sale online and you may be wondering if you are working with an agent should you be looking for listings. The answer is absolutely yes. If you find a listing you like send it to your agent and they can call on it to check the status. If you are working with a buyers agent you can use them to schedule and cancel all of your showings. Text is another way to get a quick answer. 

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