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how do I convince seller to pay closing costs?

  • April 14 2014 - US
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Answers (6)

The ONLY drawback to a seller contributing (example $5k towards buyers closing costs) is the possible risk at appraisal (if the house does not appraise for the full purchase price including that $5k extra for closing costs it "could" be a problem).

Other than that this $5k is simply "air" to a seller... a better description of it would be a very long term loan given to the buyer from the lender at today's prevailing mortgage rates paid back over 30 years (instead of a personal loan at 18% rate paid back over 10 years).

The ONLY bearing it has to a seller is the slightly added appraisal risk (If the buyer assures the seller they will remove that stipulation if the appraisal does not come in, than it essentially means nothing to a seller and wise seller will allow this favor to a buyer because the added benefit to the buyer potentially  means added benefit to the sale of the sellers home!

For sellers that are having a hard time "grasping" the concept of this... the agent needs to explain to them upon presentation of the offer that the offer is for (example: $195k NOT $200k), the agent would then explain why the offer is $195k and ask the seller to focus on THAT and/or counter offer, reject or accept  the $195k (don't view the offer as a $200k offer because its NOT)... deal with that $5k after any negotiations on the money that actually means something to the seller (the $5k is "Air"/hollow/meaningless to seller accept for my previously mentioned aspect regarding appraisal)!

Best of Luck

  
  • April 15 2014
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Profile picture for fams4
Thank you Frank and Dan, for your very useful pointers! Appreciate it !
  • April 14 2014
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Profile picture for Dan Tabit
Seller paying closing costs is the same as a discount.  If you ask for both, you may be asking a lot.  Other offers without this request will beat yours.  If you absolutely need the help, increase your offer price over list to reflect the funds necessary to cover the costs.  You must indicate a specific dollar amount, not just "closing costs" as they are not universally agreed upon and this is too vague to be useful.  State, $X,000 in seller paid closing costs and if you need more, you'll pay them. If you over estimate, the difference goes back to the seller.
  • April 14 2014
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I've had great success getting sellers to contribute. Start by writing a fair offer. Then, give seller as much information as possible with the submitted offer:
1. Get pre-approved (not just pre-qualified)
2. submit your pre-approval letter with offer
3. submit copy of your earnest money deposit check with offer- typically this is 1% of purchase price. You will be more attractive if you make this 1.5 or 2%
4. Write a less than 1 page bio of buyer. Tell your story. Include a pic or two. Submit with offer.
5. Shorten your inspection period buy 2 or 3 days.
6. If you know the neighborhood you are wanting to purchase in, ask your Realtor to send letters to all the homeowners in that neighborhood telling them He has a buyer wanting their house.
7. Write more offers, you'll get one soon
  • April 14 2014
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Why is that, wetdawgs?
  • April 14 2014
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In a seller's market, this is not easy.   You could offer  more than asking price so that the closing costs are included above a normal offer, and make it clear that if  the property does not appraise for the increased value you will handle closing costs yourself.

I'm an old curmudgeon and would like to see this business of "seller pays closing cost" go away completely.
  • April 14 2014
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