Seller Assistance, Seller Help, Closing Cost Assistance…
Asking for the seller to help pay the Buyer’s closing cost is pretty common…in fact, I would not be going out on a limb to say this request finds it’s way into about 90% of all purchase agreements written in our market.
but almost always a shock to a Seller the first time they are asked to contribute to the Buyer’s closing costs.. .
- Can be the most contentious,
- The least understood, and
- The most likely to kill a sale.
Expenses can mount up quickly when selling your home. You’ve made repairs, rented storage space, painted, cleaned the carpets, and spruced up the landscaping. It is all adds up – and fast!
The excitement of getting an offer can easily turn into frustration, though, when you find out the buyer has ask for closing cost assistance.
Yep…there it is, in black and white.
“Really?? Lets put the brakes on here for a minute…”, you may sputter indignantly.”Is the BUYER asking ME to pay my closing costs and theirs, too?”
You’ve put a lot of time an money into getting it ready…and you know it’s priced competitively…well then – Heck!
They certainly don’t think you’re going to give it away, let alone pay them to take it off your hands!
It sounds pretty greedy…and you’re probably feeling a little insulted! You bought your home without any help, after all…and they can, too!!
Take a deep breath. Let’s back up and dig deeper into this outrageous request and look at it from a different perspective…
Old Ways Don’t Open New Doors…
About 9 out of 10 offers I present to sellers include asking the seller to help with closing costs. This is especially true if your home is most likely to attract a first-time home buyer using FHA financing.
Without closing cost assistance, these buyers probably won’t have the available cash to purchase.
Before this program was available, buyers needed to save up 20% before they could buy a home…certainly a worthy goal.
But just consider that a home with a price tag of $100,000 today could be purchased for $15-20,000 in the 70’s and 80’s.
20% down at these prices would have been $1500 – $2000. To put down 20% today on the AVERAGE home purchase requires a whopping $15,000 to $20,000.
You May Actually Get More For Your Home
It’s a fact…Buyers crave a deal.
One with the ability to purchase without closing cost assistance will use this to their advantage by seeking a lower price. They believe sellers would rather take less money than help another less prepared buyer with the purchase.
And for an uniformed seller, this is too often true. Especially if they have rejected better offers that include Seller Assistance…
It’s crucial to your bottom line to know how this works.
You Can Meet Your Financial Goals and STILL Assist With Closing Costs
Asking the seller to for closing cost assistance is a legitimate way to roll the closing costs into their mortgage. Buyers ADD the closing cost to the amount they are offering.
For an example, your are asking $100,000 for your home…
The buyer has actually offered $94,000 as a purchase price and has added the assistance to it. If this amount satisfies your goals and financial needs, you can accept it with the confidence that you haven’t given anything away.
If it’s short of your needs, you counter with the number that you would like and ADD the closing cost to it. In this example, if the number you would like is $96,000, your counter would be $99,000.
You sell for $96,000…the buyer’s mortgage is $99,000 and they get to finance $3000 of their closing costs.
Remember These Key Points When An Offer Includes Closing Costs Assistance
- More than likely, your buyer needs these funds to be able to purchase your home…don’t be tempted to reduce this amount in your counter.
- Negotiate from the NET offer amount, then add back the assistance requested to determine your counter offer.
- Mortgage regulations won’t allow a buyer to get a loan for more than the purchase price, so this is a legitimate way to get their closing costs included in their loan.
- If the most likely buyer for your home is a first-time home buyer, 9 out of 10 offers you receive will include a request for seller assistance.
- Even though you have agreed to provide seller assistance, you are not responsible for these costs if the sale doesn’t close.
Now you know…when you get an offer that includes closing cost assistance, don’t be offended…just ask “What’s the NET?”
Take this quick one-question quiz and find out how others feel about paying buyer’s closing cost when you submit your answer.