Profile picture for WhimseyWoman

Is it standard practice for sellers to pay buyer's closing costs? (please read details)

Does one need to be in a certain financial situation to get that, or can any buyer?

When we sold our home, we credited money to the buyers for closing costs. I'm hoping we can get the same thing when we buy a home.

  • August 12 2014 - Seattle
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (44)

Best Answer

Profile picture for Jason Bolyard
It largely depends on the area. Some areas it is not standard practice and some it is. There are websites dedicated to disclosing this. Also remember, even if its not standard in your area it can still be requested and its up to the other party to accept or decline.
  • August 14 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Let's assume that the house doesn't come with a refrigerator, washer and dryer, and that the models the buyer would like will cost $4,000.  There the options to the buyer include:  (1) Planning on spending $4,000 in cash after closing to buy the appliances;  (2) Planning of borrowing $4,000 on a credit card after closing to buy the appliances; or (3) Adding $4,000 to their contract offer price and having the seller buy the appliances.  

 If the buyer goes the third route they will effectively be financing a refrigerator, washer and dryer over a 15 or 30 year period, depending on the length of their mortgage. The appliances won't be free because the seller bought them any more than some of the closing costs will be free because the seller paid them.  The seller will still be looking at their net recovery in deciding whether to accept the offer, and the lowest offer they will accept will have a gross price that will be $4,000 higher if the buyer is asking for $4,000 or closing costs to be paid or $4,000 of appliances to be bought.

So again, the seller looks at net price, and will only consider a buyer asking for closing costs to be a negative if they are concerned about the appraisal or the strength of the buyer.  The buyer only asks for closing costs if they need to or if they want to maintain more liquidity.  The inclusion of seller paid closing costs increases the borrowing of the buyer, so it's not something they should do unless they have a reason to do so.

 
  • August 16 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If you're in Seattle, it isn't "only a month," it is, "it's been a whole month." Seattle is a one-week market, and if you haven't gotten an offer this good in a month, you almost certainly wouldn't get one as good a month from now.

This is what happens when you price a property above market, you have to negotiate with buyers. If you price it just below (which isn't always easy to do), then you can "have the upper hand."

  • August 15 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Blue Nile
"we were advised quite adamantly - even in our market which IS a "seller's market" - that we should take the offer and pay the closing costs because "you might not get another offer for months." I feel like we were scared into accepting"

"Questions and responses are not about you personally. Remove yourself from the equation and think objectively" -

I think that is the entire issue; it is not possible for agents to remove themselves from the equation; they are "scared" as much as anyone that they will either "not get paid" or that they will have to put in substantially more work to get paid about the same.

The common colloquial expression is "one in the hand is worth 2 in the bush".  It applies both ways; if you have a "decent" offer but don't know about others, it is worth trying to work with the offer if possible.  But if you are making offers, and one is a pretty close match, it is worth trying to work with what might make the deal work for the seller and put it on the top of the stack, rather than searching for months trying to find a similarly good match.

But there will always be others; so it doesn't do any good to be beating at the bush when you can just look elsewhere.

In all bargaining, it is timing, and not appearing desperate or needy.  Whoever can walk away easier has the upper hand.
  • August 15 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I will say again - if you want the house, make your offer look the most appealing to the seller. Since you've been in the seller position you have that advantage to other buyers who may or may not have been in a sellers position.

There is no real standard because concession fluctuate and are pretty much always different. No one answer is absolutely correct so take what you have learned and all of the advice and create your own formula for your new purchase.
  • August 15 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for WhimseyWoman
For those who don't read things already posted for clarification...

...and as I said when I had basically asked the same thing from the seller side of the equation, we were only a month into listing the home when we got the offer, and we were advised quite adamantly - even in our market which IS a "seller's market" - that we should take the offer and pay the closing costs because "you might not get another offer for months." I feel like we were scared into accepting. Anyway - what's done is done. The point is moot. Now as a potential buyer, I'm asking because I'm curious if what we experienced is what other people typically experience.
  • August 15 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

As an agent in my area we always ask for some money towards closing cost.  Their is no standard but I know with conventional loans, the buyer can ask up to 3% and FHA can ask for up to 6%.  The amount giving by seller is at sellers discretion while you are negotiating a contract.
  • August 15 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

As recently as last year many of my transactions asked for closing costs and the seller agreed to pay - maybe not the entire amount that was originally asked for but they got some.

In the past 4-6 months that has changed and buyers are not asking for costs (at least not as often as they were).

In my experience every transaction is unique and therefore every offer is unique.

There are typical and standard practices in every area but you are competing with several other offers you want yours to look the best and most appealing to the seller which usually means not asking for anything including closing costs.
  • August 15 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Everything is negotiable and written in the purchase agreement for clarification.  Anyone can ask for the seller to pay for closing costs.  
  • August 15 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for WhimseyWoman
Advice:
Questions and responses are not about you personally. Remove yourself from the equation and think objectively, or don't bother participating at all.

Just a suggestion.

If one cannot see how one can be instrumental in improving the process, perhaps one is not as passionate about one's profession as one would like to believe?
  • August 14 2014
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Pasadenan wrote:  "You are not even going to know decades later, because first, there is no way to measure "best"; there are too many variables and too many trade-offs between the variables, and what people consider important changes over time; and second, no one has the opportunity to trace through what "would" have happened if a different path was chosen."

I know someone who was still regretting having conceded $500 from the list price on a sale that was over 10 years prior.  Sometimes it's best to just let things go.

But in this case I still get the feeling that WhimseyWoman is looking at this as if she gave up something special by allowing closing costs, and now wants something special on the buyer side.  From the seller's point of view $5,000 of closing costs is no different than $5,000 of price reduction (unless appraisal or buyer strength are concerns).  And for probably the third time, from the buyer side it just means you'll end up financing part of your closing costs.  It's not really money coming from the seller.  Instead it's about the buyer's liquidity and/or availability of funds.  The seller is not going to be accepting a lower net price than what they otherwise would have just because it's "seller financed closing costs."  If you want to borrow as little money as possible you don't ask for seller closing costs.
  • August 14 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Here's the thing. If I list my house for $400,000 and it's worth $450,000, there will be no seller-paid closing costs, there will probably be preinspections and no contingencies whatsoever. If I list it for $485,000, in a month I'll be glad to take an offer for $460,000 and pay $10,000 in closing costs. It's all a matter of - how good is the deal.

  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Best standard in real estate is "everything is Negotiable".  Some cities have gov. grants and special housing assistance programs where they will pay a % of your closing cost... check with you local loan officer in seattle..

all the best..
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Blue Nile
"The fact that there is actually no way to know if the best decision was made, until decades later, by looking back on the decision, isn't in the textbook." -

You are not even going to know decades later, because first, there is no way to measure "best"; there are too many variables and too many trade-offs between the variables, and what people consider important changes over time; and second, no one has the opportunity to trace through what "would" have happened if a different path was chosen.  There are just too many forks to chose from to be able to calculate what "would" have happened.  It is that old Robert Frost poem dilemma  "The Road Not Taken".... "yet knowing how way leads on to way, I doubted I should ever turn back".  "I shall be telling this with a sigh; somewhere ages, ages hence, two roads diverged in a yellow wood, and I?  I took the one less traveled, by, and that has made the difference".
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

That's a great question.  It is not an automatic guarantee for a seller to pay the buyer's closing costs.  If a buyer chooses to ask the seller to pay closing costs, it is up to the seller if they will or will not agree to those terms.  As a buyer, you run the risk that a seller may choose another offer that does not ask for closing costs.  Each situation can produce a different outcome depending on the current market in that area, the seller's motivation, activity on the property, amount of buyers, etc.  I hope this helps...Good luck in your search for the perfect property!
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Mathew, the only listing I've ever had not appraise was a bidding war situation, and everyone realized that it would not appraise for the amounts being bid.  Accordingly we made them strike the appraisal language in the contract and sure enough, it didn't appraise.  

 In any case, in a seller's market you are going to be more concerned about an appraisal because the prices do tend to be going higher.
  • August 13 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Carole Tyne
It is all what you can negotiate.   If there is competition it would not be likely.
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

The reason there are not standard practices is the decision is up to each seller.
  • August 13 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for WhimseyWoman

Way to go on the disingenuous response. Have a great day!

  • August 13 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

The "exam" is basically a business law exam. It has nothing to do with selling houses, negotiating prices, or handling Client objections, or concerns. It also has next to nothing to do with financing, Seller concessions, or the behavior of free actors, in free markets. The fact that every house is different, and time affects markets, and market players, in incalculable ways, that are sometimes counter to logic, is not covered in the course work. The fact that decisions of this magnitude rarely ever end with a great degree of confidence, that the best decision was made by, or for, any of the participants, whether, or not, they actually made the best decision, isn't covered in the course work. There are vagaries, remorse-fulness, and second guessing opportunities, involved that don't exist in most of life's decisions. They aren't addressed in the licensing coursework. The fact that there is actually no way to know if the best decision was made, until decades later, by looking back on the decision, isn't in the textbook.

The fact that you sold your recently refurbished, forty year old townhome, for a price higher than an asking price, that you determined, in less than 100 days (?), and are mad about how it went, is not covered in the textbook.
  • August 13 2014
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for WhimseyWoman
That's exactly the point I'm getting at, Hamp -- there aren't any, but perhaps there ought to be.

I mean don't real estate agents have to pass some type of exam? How does one ever pass when there aren't any standards??? Heck - how do they certify anybody if there are no standards on which to check people?
  • August 13 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

In real estate, there is no "standard practice", although it is the goal of the buyers real estate agent to get the seller to credit buyer for closing cost it all depends on the current real estate market you find yourself in. If your currently in a market were there are more buyers than homes for sale typically referred to as a "sellers market" getting the seller to give a credit for buyers closing cost would be very challenging since sellers probably have many offers to choose from.

However, if your in real estate market that has lots of homes for sale with few buyers or homes for sale take longer to seller this is typically "buyers market" and a buyers real estate agent has a higher chance of negotiating seller to credit buyer for closing cost.

In real estate everything is negotiable, it all depends if your in a position to negotiate as a buyer or as a seller.
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Just to clarify, once, and for all who care, there is no such thing as "standard practice" in Real Estate!

Real Estate is practiced on a case-by-case basis. And "practiced" is a perfect word for it. 'Cause nobody has even come close to perfecting it.
  • August 13 2014
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Bill Heenan
Hi. It is not 'standard practice', but often agreed to when asked as long all other terms are acceptable. 

Good luck!
Bill Heenan
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I hear agents worry, but in 14 years and over 150 transactions, I have only had two deals not come in at or over appraisal value. And neither was because of closing costs.
  • August 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

WhimseyWoman, hopefully you will live in your next house a long time.  That should always be the goal.

As to getting different opinions, that's the nature of real estate and the nature of the Internet.  You can get all sorts of opinions.  Some of them are "right" and some of them are nothing short of absurd.

But let's take the closing cost issue out of the equation on your sale.  After your house had been on the market for a month you would always have the issue of whether or not to accept or counter an offer.  And even once you come to terms you might always question whether or not you could have been able to get the buyer to pay more.  That's just the nature of negotiations.

Adding in the closing costs issue doesn't change things, except for the appraisal and quality of buyer issues I mentioned below.  Since your sale closed, presumably neither of those issues was an issue.

 And let's take the closing cost issue out of the equation on your purchase.  You could always offer less for a property instead of asking for closing costs.  If staying liquid isn't important to you, that's exactly what I would suggest.  If you can pick up the property for a lower price it won't matter that you didn't get your closing costs paid.  As I mentioned below, the net effect of asking for closing costs is just that you end up financing them over the life of the loan. The seller isn't just giving you something for free.
  • August 13 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for WhimseyWoman
...and as I said when I had basically asked the same thing from the seller side of the equation, we were only a month into listing the home when we got the offer, and we were advised quite adamantly - even in our market which IS a "seller's market" - that we should take the offer and pay the closing costs because "you might not get another offer for months." I feel like we were scared into accepting. Anyway - what's done is done. The point is moot. Now as a potential buyer, I'm asking because I'm curious if what we experienced is what other people typically experience.

Apparently this aspect of a real estate transaction is all over the place. Everyone has a different theory or rule of thumb. This is truly a ridiculous business. I hope our next home is one we live in for a very long time and then we die of very old age before we ever have to sell or buy again.
  • August 13 2014
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr
Does one need to be in a certain financial situation to get that, or can any buyer?

I've read through the comments, and the bottom line is this...

It all depends on how badly the seller needs to sell the house, and how much competition there is amongst the buyers.

If a seller really needs to sell, and there's not much buyer interest (i.e., a "buyer's market"), then the seller will be more inclined to consider things like less-than-full-price-offers and seller-concessions.

On the other side of that coin, if the buyer is really needing/wanting to buy, and every house is being snapped up pretty much within days/weeks of going on the market and their offers are being rejected (i.e., a "seller's market"), then the buyer becomes more likely to make higher offers, and less likely to ask for concessions.

As with most any negotiation, the person whose need is the greatest is the most likely to concede to the other side.
  • August 12 2014
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

15 answers and only Pasadenan mentioned the appraisal?

For a seller a $500,000 offer with no closing costs is exactly the same as a $505,000 offer with $5,000 of closing costs, EXCEPT THAT when you raise the price you increase the likelihood that the property won't appraise for the sale price.  In some situations that might be a concern, especially if the property was already priced high.

I would also note that in a multiple offer situation a buyer who does not need closing costs is more likely to be considered the stronger buyer, but that might be offset by other factors, such as the stronger buyer having an agent who is weak.

Whether to request closing costs as a buyer is more dependent on your own financial situation.  Whether you want to stay more liquid at the expense of basically financing your closing costs over the length of your loan.
  • August 12 2014
  • 3Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If you're in Seattle, and your property doesn't sell in the first two weeks, you will (almost virtually guaranteed) NEVER see a full price offer unless you reduce the price.

Half of Seattle listings . . . well, you read the papers, you know the market. Whether you have months to wait or not, buyers look at listings that are ten days old and consider them shopworn and readily discountable.

If you bid on a property that has been on the market for a few weeks, you can probably get a full-price offer accepted with the seller paying closing costs, just the way you did it.
  • August 12 2014
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

  1. 1
  2. 2