Profile picture for datruth41

what are some ways to land sellers concession ....how do u get them to agree to pay closing costs?

  • February 02 2009 - Irvington
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Answers (19)

Profile picture for Robert.Northfield
The best and easy way is to negotiate the price the seller will be getting then add 3% on the top of that towards closing costs. The contract will need to be written at the higher number and a reference made to the 3%concession on the contract. Always negotiate the net price to seller first then request adding in the closing costs later. Good luck
  • March 09 2009
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You simply negotiate for them. Have your lender submit a GFE to you before making an offer. Once you know what your settlement fees will be, then you can negotiate with the seller accordingly. You MUST know exactly what you're doing to effectively interpret the GFE and to negotiate to have those fees paid by the seller; and, it must fall within the loan's guidelines of maximum seller -concessions.
  • February 18 2009
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Agree with Marc - seller concessions for closing costs adds pressure to the appraisal.  Very often the closing cost concessions are requested on deals where there is little money to put down and the closing cost concession just adds additional stress to an already tough situation.  I would agree that it is much cleaner to just reduce the price, but if closing costs are an issue, then the way to go about it is to build it into the offer. Do a thorough job on the pricing analysis so that you buy the home at a reasonable market price - that should insultate you on the appraisal front.
  • February 18 2009
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Lewis is right on the money. I ask for (and get) closing costs paid by the seller all the time. It is especially helpful for 1st time homebuyers. The sellers are only concerned about their net proceeds. The deal has to be structured with that in mind.
  • February 17 2009
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As a listing agent I can say that there is no such thing as a Seller paying closing costs.. 
Bottom line is that a Seller has a certain amount of money that they must "net" from the sale. If they are contributing $10K towards closing costs that simply means you could have bought the home for $10K less than your contract price.. Which in turn means you are financing or coming to closing with $10K more than you would have to.
  • February 03 2009
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prfstrkr,

ok.  I understood your point incorrectly.  Very true. 

  • February 03 2009
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Profile picture for prfstrkr
This is a ridiculous point continually brought up on these boards.  For closing costs what are we talking about in normal transaction... less then $10K.  Let's call it $10K with 6% commission, that is $600 total commission, of which Seller or Buyer's side Agent will see $150.

we are not talking about how much of the commission each agent ends up with here ... lowering 10K in sales price rather than paying $10K in Closing Cost will save the seller $600 ... simple fact
  • February 03 2009
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the lower the sales prices, the lower the commissions

This is a ridiculous point continually brought up on these boards.  For closing costs what are we talking about in normal transaction... less then $10K.  Let's call it $10K with 6% commission, that is $600 total commission, of which Seller or Buyer's side Agent will see $150. 
  • February 03 2009
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Profile picture for klarek the realist
About the last thing I'd worry about is if the deal didn't go through because I'm asking for too low of a price or too many concessions.  I'd say good riddance and I'll enjoy watching you continue to lower your price while regretting not taking my offer.

And if the appraisal comes in below what you're trying to pay, then you are paying too much.

Ask for the world, they're still selling you a bubbled property.
  • February 03 2009
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Profile picture for prfstrkr
some sellers are more willing to lower the sales price rather than paying closing costs ... the lower the sales prices, the lower the commissions
  • February 03 2009
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I agree with Marc.  You save the most, IMO, in taking as much of the price as possible.  Whether you get property for an extra $10K off purchase price or on not paying closing costs, either way its $10K saved, but much cleaner to save in purchase price.

Also as Lewis pointed out Seller's tend to balk at opened ended costs.
  • February 03 2009
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If there are issues with a home inspection you can ask for seller contributions. If you ask for them up front you will sometime run the risk of  the home not appraising.
  • February 03 2009
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Profile picture for Marc Paolella
Wrong FLY,

The appraisal has to come in over the contract price to make a concession work. This is NOT HAPPENING ANYMORE. The correct approach is to make your best offer on price alone, and keep the deal clean so it has a good chance to close.
  • February 03 2009
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In this market you should always have the seller pay closing cost AND get them down on price.

No brainer, if they say no just go to the other 20 similiar homes on the market.

  • February 03 2009
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Profile picture for Marc Paolella

Why ask for a seller's concession that complicates the deal instead of just offering a lower price? It makes no sense. You are not saving anything. And the appraiser is just going to kill it anyways. Just offer a lower price and pay your own closing costs. Same difference, less complications.

  • February 03 2009
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Profile picture for datruth41
marc i never said i couldnt afford it, but why not save whatever you can...you obviously wouldnt do much negotiating...leonardo, lewis thanx for the info
  • February 03 2009
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Profile picture for Marc Paolella
You also need the appraiser to appraise the home for more than it is selling for. That is generally not happening right now. If you can't afford the closing costs, it probably also means you don't have much of a down payment. If these facts are true, you should not be buying a home at this stage of your life.
  • February 03 2009
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You will have to negotiate the terms with the sellers. Your real estate agent should help you with the negotiations.

Generally, you will probably want to offer as close to asking price as possible in order to get the sellers to concede to contributing to your closing costs. The type of loan and the loan-to-value will dictate how much the sellers can contribute. Be sure to discuss this with your lender before you make an offer.

Also, you will probably find it easier to negotiate a concession from a seller for a home that has been on the market for a while as opposed to a home that just came on the market, or where the sellers are "motivated" to sell (i.e., job transfer, divorce, etc.).

Good luck!
  • February 03 2009
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Profile picture for The Leonardo Group

Hi Dat,

If the offer comes at asking then there is a good chance to "convince" the seller to pay closing costs. But like everything in life it should be done in writing. I have been on both sides of a transaction where closing costs were paid by seller. One thing to make the seller more comfortable is to have it written in a way like this " closing costs to be paid by seller not to exceed 3% of the sales price" that way it is not an open ended commitment by the seller.
Good luck.

Leonardo

  • February 02 2009
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