Acquisition Cost
The definition of acquisition cost in real estate is the total cost recorded by a company or individual pertinent to the purchasing of a property. This is the entire amount written down in the books and on tax records, and can be claimed when filing corporate taxes. Acquisition cost differs from gross sales price in that the costs calculated to determine the former come out of the buyer’s end, rather than the seller.
This cost includes the cost of the property, cost of appraisal fees, attorney's fee, commission, credit report, hazard insurance, document preparation fee. Also included are the loan application fee, mortgage insurance application fee, mortgage insurance premium, mortgage taxes, pest inspection, property survey, tax stamps and title insurance.
Examples of acquisition cost in real estate
A relatively new arrival in the local construction market, Regal Construction Co. is growing by leaps and bounds due to a combination of efficient management, innovative construction techniques and skilled laborers. Considering their rapid growth as a company, the firm decides to relocate to a new head office, to be constructed on an undeveloped parcel closer to the regional center of industry.
In searching for a suitable listing, the company must take into consideration all of the factors that contribute to each individual listing’s acquisition cost. Depending on its location, the property may have a higher appraisal cost. If additional capital is required, loan application fees will have to be taken into account.
Furthermore, additional costs may be incurred depending on the specific environment of the tract in question. If the area is infested with insect, reptile or rodent pests, extermination fees will also need to be assessed. Property surveys may be necessary as well, to uncover potential difficulties in construction that may present themselves.
When all the costs immediately relevant to the purchase of the property have been totaled, Regal Construction Co. will have determined the acquisition cost of the property in question.
Popular Real Estate Terms
Local zoning law or private limitation on how far in feet a structure might be situated from the curb or other appropriate marker. ...
Lease that incorporates increases in agreed-on payments over the term of the lease contract. For example, a particular step-up lease may require that the lessee pay a 10% increase each year ...
A fixed marker or monument, either erected or naturally occurring, which serves as a boundary line for a parcel of land. For example, a stream on the eastern edge of the property serves ...
Legal mechanism available for a person who is over his head financially and is unable to meet his financial obligations. ...
Proposing or presenting for acceptance a price for a property parcel. Evidence of willingness to enter into a sales agreement. The bid price in a real estate or security ...
Local governmental ordinance breaking down the country into districts that are restricted on how private property is to be constructed and used. It applies to the land and buildings. The ...
Formal statement by an auditor, after through examination and consideration, as to whether a real estate company's financial statements fairly present financial position and operating ...
Timeshare homes is the popular name given to the concept of fractional ownership in real estate, and, in fact, is a better term to explain its meaning.Why?Well, fractional ownership means ...
Heading of a document, such as a real estate report. ...
Comments for Acquisition Cost
Just purchase a home and want to sell it after living here for about 1 year. Need to know how much we can make on the house without being taxed?
May 30, 2020 13:24:07Hey, Gloria! If you want to determine the value of your home, you need to get in touch with a professional appraiser or find a real estate agent near you that can help evaluate the value of your property. You can go to our directory page linked above and search for an agent either by typing in the Zip code or the area your property is located. Also, if you need help you can contact us via live chat or directly at the following phone number 1-866-495-4953
Jun 05, 2020 09:00:20which apps can i find thw best real estate networking communities
Aug 22, 2018 10:42:38As a homeowner or real estate agent?
Aug 27, 2018 11:55:58There are so many... but we like How Real Estate Agents can utilize Houzz both with their existing (and potential) clients but also to network with architects, decorators, home stagers etc.
suppose I borrow money ,as an investor,to buy a house .Explain to me how I could take an acquisition fee and how the overall sum would be payed back to my private lender
Aug 04, 2018 09:38:13Hello Oya
Aug 06, 2018 09:31:25Thank you for reaching out!
An acquisition fee is a sort of administrative fee that lenders set up for their work arranging the loan. It can be paid as a one-time thing that you pay upfront if you negotiate so - the values typically aren't that big, so it's doable. But it's more common to water down the acquisition fee inside the monthly installments. For instance: instead of paying $800 in one shot, you will include $20 on your monthly payment of $1000, leading to a mortgage of $1020 a month. for 40 months.
Hope we cleared that one for you! Good luck!
Have a question or comment?
We're here to help.