In almost every real estate transaction there are going to be "closing costs" of some type.  Whether in the form of escrow fees, points (an up front percentage of the loan charged by the lender, usually 2% or so, of the loan), or insurance, they are going to be there.  As they vary from state to state and even county to county I am not going to go into any detail other than to say that there will be costs.

 Another reason for not going into detail is that when structuring no down transactions, they take on less importance, because they do not have to be paid out of your pocket.  In any transaction that is being structured to bring cash into the deal, whether through saleable notes or new loans, you can usually stipulate that the seller pay all closing costs.  If the seller does not like that solution as well as you do, then just raise the price of the property by the amount of the costs.  That way it still does not cost the seller anything and it does not have to come out of your pocket.  Then where does it come from?

 Closing costs will always have to come from the money that you raise to go into the transaction.  If you know that you can get a loan of $70,000 from the finance company, and the closing costs are going to total $3,000 dollars, don't sell the seller on the idea that you can get him $70,000 dollars.  Tell him $67,000  dollars and use the other $3,000 to pay the closing costs.  That's right.  You can even borrow the closing costs. You can then increase the amount of the second he carries and the sales price by $3,000 dollars.  In other words, if this were another $100,000 sales price, you increase the price to $103,000, borrow the $70,000, have the seller carry back $33,000 and have the seller pay all closing costs out of the $70,000 dollar loan. Next Chapter



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