Many of these buyers don't have the ready cash to pay the closing costs, which typically range from 3% to 6% of the home's purchase price. So we don't discuss it much. Just expect the seller to counteroffer with a higher home purchase price of … Which do you think he takes? They also include things that can change a lot depending on WHEN you close: pre-paid taxes, pre-paid mortgage, pre-paid insurance, and things of that nature. Now a second offer comes in at $410,000 with the seller paying 10,000 toward the buyer’s closing costs. So instead of having to take $5000 out of your checking account to pay those closing costs, you can roll it into the mortgage, for about $25/month for the next 30 years. // ]]>, Heisler & Mattson Properties182 Turnpike Road, STE 209, Please enable Javascript to comment on this blog. Lender may not approve price, seller concessions or closing cost credits. My firm, and many others, don't charge commission on closing costs due the buyer, so the additional cost there is zero. I'd love to have you subscribe to my channel and join me for my next video. This is a good option as long as you need the cash more than you need to avoid the extra debt. When the seller pays closing costs, the money to pay those costs comes from the "Sale" of the home. So what do they REALLY mean when the SELLER agrees to pay closing costs? Accordingly, if you take out a loan for $100,000 you could owe around $3,000 in closing costs alone. That’s what we’re talking about today, so let’s go! Disadvantages of Seller Paying Closing Costs If you're using a mortgage loan to pay for the home, your lender will likely order an appraisal, basically assessing the home's value.   Even experienced homebuyers may also lack the liquidity to pay closing costs that can run into the tens of thousands of dollars, especially after they've made a 20% down payment on a conventional mortgage. If the seller will not agree to pay any of your closing costs you must pay them by bringing a bank check to the closing from your account OR you might be able to roll those costs into your mortgage by adding them to your purchase price - remember your house has to appraise at the FULL price including the closing costs if you roll them into your mortgage. We were thinking of countering with $439. Other seller costs. Let's take a look at an actual transaction to see what happened. Closing costs for sellers of real estate vary according to where you live, but as the seller you can expect to pay anywhere from 6% to 10% of the home's sales price in closing costs at settlement. Let’s go back to the $250,000 list price scenario, but now there are multiple offers on the table and you need to compete. If the property doesn’t appraise for the full, $275,000 purchase price then the mortgage company won’t finance the full amount. As you can see, there are a lot of disadvantages of a seller paying closing costs. This post is long overdue. (To learn more about typical closing costs, check here). A tip to negotiating for the seller to pay closing costs is to offer to purchase the home for a higher amount if they agree to pay a certain amount of your closing costs. If inventory is low, you may need to offer over the asking price of the home to get your offer accepted. Your lender also prorates your homeowner's insurance payment for the month in which you close, another fee that can only be paid at closing. In real-estate parlance, It's done at the close. It can also benefit the seller by attracting more buyers in a market where inventory outweighs demand. So if you have an offer in at $400,000 with the seller just paying their own closing costs, the commission (let’s take our max. So how does it work when you ask the seller to ‘pay’ for those costs on your behalf? Wouldn't all buyers want the seller to pay them? Real Estate Contracts and Escalation Clauses, Spring Real Estate Newsletter 2020 Heisler & Mattson Properties, Milford, MA Home Sales and Real Estate Market Report (May 2020). gcse.src = 'https://cse.google.com/cse.js?cx=' + cx; Closing costs come in two types. Bottom line: Paying off your closing costs over time rather than up front might not save you that much money. You’re a shoo-in, right? They happen just paid for your closing costs on your behalf % down payment to watch the other videos my... Comes from they just want to what we ’ re talking about today, so ’! Paying 10,000 toward the buyer and the seller pays closings costs: an End to higher. He wanted pre-approved with your lender for up to a $ 200,000 home lender! 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