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How normal is it for sellers to pay buyers closing costs? How are they calulated?

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February 19 2012 - US
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It all comes down to motivation!  If a homeowner is motivated to sell, he/she will entertain paying some closing costs for the buyer.  If the motivation is low, or the activity level is high on the property offered for sale, homeowners will be far less likely to pay buyers' closing costs.

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February 21 2012

Hello mgroark1,

In California, it is not uncommon for a seller to pay for a portion of the buyer's closing cost. As for how the fees are calculated, they are actually based on the purchase price of the home and a buyer would be provided with a financial statement outlining all associated costs with the transaction.

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February 21 2012
In the current real estate market, sellers may offer to pay buyers' closing costs.  It is all negotiated in the sales price and is not a requirement.  In a buyer's market, owners need to consider this option, which is on the average 3% of selling price.  It is most commonly seen in foreclosed properties.
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February 19 2012
If the home is a starter home or a home that would appeal to first time homebuyers, there's a pretty good chance that the buyers will ask for sellers closing costs as part of the purchase.

I've mostly seen 3 percent but have seen as high as 6 percent.

When pricing a sellers home I often make them aware that the buyers may ask for sellers paid closing costs. This could affect how they price their home for the market as they are often keenly aware of what they want to net from the sale of their home.
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February 19 2012
In Chicago, it does happen but I usually see it in less than a quarter of the transactions. In my experience, it is important that the dollar amount or at least the maximum dollar amount be specifically agreed to in the contract. Most lenders will not want to see a blanket statement of seller paying for an undetermined amount of closing costs in underwriting. For example, a buyer can make an offer of $250K with the seller paying for $3K or up to $3K of the buyer's closing costs. To a seller, the net is what primarily matters to them. An offer of $250K with a closing cost credit of $3K is essentially an offer of $247K. But for a buyer, it can help with their cashflow especially if they are cutting it close with their down payment. Essentially it is a way of financing the closing costs.

One more thing that is important. In my experience, the closing cost credit can not exceed the buyer's total closing costs. So if a buyer has total closing costs of $4K, a lender will not approve of a closing cost credit of $5K. Closing costs will vary by area and a number of factors. But in Chicago, they tend to run around 2% of the sales price, give or take.
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February 19 2012
Hi. In today's market, it is fairly common that the seller pay closing costs. A general guideline for the amount of closing costs is about 3% of the purchase price. This, of course will be more or less depending on other factors of the deal. As a buyer, you can request in the offer that the seller pays all of that or a portion of that. The seller can agree or counter the amount. Good luck!
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February 19 2012

Depends on where you are at and what the purchase price and selling situation is.

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February 19 2012
Hello, in the market here in CT it is very common. I would say at least 75%2 of the time when mortgage financing is involved. As far as how these are calculated that is handled by the lender and the closing agent or real estate attorney (depends on your state.) They work together to come up a number for the closing. This is presented to both buyer and seller at least 48 hours in advance... but the lender working with the buyers agent should be able to provide an estimated amount for the buyer to work with when making an offer and negotiating. The wording typically states that sellers will pay up to a certain amount, I.e. a maximum credit or a flat amount like $5,000. Ask your listing agent what a typical amount is in your area.
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February 19 2012
 
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