When trying to plan my next blog I wondered what to write about, and I realized that there are a few big questions I always get from buyers. So here are a few of my top buyer questions:
- What’s up with “New” taxes, and how do I figure out what they’ll be?
With new construction, the assessor’s office hasn’t divided the one PIN number for that building into lots of separate PIN numbers yet. Once they do that, since taxes are paid in arrears, it may be quite awhile before you receive your first tax bill. So, we tell our clients to estimate that they will be between 1.5%- 2% of the purchase price, just to be on the safe side. (Did I just hear somebody snore?? This is exciting stuff, I don’t care what you say.) If you want more info about taxes, I have a great article I can forward you that actually goes into how taxes are calculated in Cook County. Just email me.
- Closing Costs? How much are they? What am I paying for?
Ok – many people find that their closing costs run them about 2% of the purchase price. They really depend on how much you are spending, so I can’t give you an exact dollar amount. What I can mention are some of the items you’ll pay for:
- Attorney’s fees
- Lender fees (including your appraisal, usually)
- Title company charges
- Your home inspection (YES you need one, more about this in a moment), but this is done before you close
- Pre-paid interest and taxes- It’s cheaper to close on the last day of a month because then you don’t have to pre-pay for the remaining days up front
- And, everyone’s favorite Chicago Transfer Tax Stamps. Every buyer pays the lion’s share of these taxes, and they will cost you $7.50 per $1000 of your purchase price. So, if you buy a $200,000 condo, it’s 200 x 7.5= $1500. This is the one that most people don’t know about until their realtor tells them about it. So, consider yourself told.
- There may be other, smaller miscellaneous charges like recording fees or endorsements, but that’s it in a nutshell.
- Guess what you DON’T pay for the services of your helpful, friendly, knowledgeable Buyer’s Agent.
- Do I need an attorney? After all, I have a realtor and a mortgage broker.
Yes, and we can do a lot for you, but we can’t practice law. You need someone to read those hundreds of pages of condo documents, property reports and meeting minutes, interpret and write legal documents on your behalf, and go over your deed and loan documents with you at closing. It’s worth every penny, trust me.
- I’m buying new construction/a gut rehab
Do I really need a home inspection?
Absolutely. Here’s the deal: If you have an inspection on your newly built unit, and you find something wrong, you simply put it on your punchlist for the developer to remedy within a certain amount of time. And who better to help you look for those things but a pair of trained eyes? And, with rehabs (gut or otherwise) you should have one for the same reason. I always recommend having an inspection done because you want to make sure that you’re protecting your investment. And if there are items that need attention, you can take care of them right away.