Suzanne Walker, Broker
Direct Number: 405-609-4251
Office Number: 405-792-7878
  • Home
  • Buyers
  • Sellers
  • Blog
  • Testimonials

Seller Pays Buyer's Closing Cost!

4/28/2012

 
Picture
Do sellers pay the buyer's closing cost or is it really the buyer paying it? I constantly hear buyers say, "I've heard Sellers should be expected to pay my closing cost." or "My lender said, 'Have the seller pay your closing cost."  

Picture
First, let's define buyer closing cost. These might include but are not limited to: prepaid 1 year homeowners insurance, lender tax/insurance escrows, title insurance, origination/discount points, processing fees, underwriter fees, tax service, flood certificates, credit report, appraisal, prepaid interest, mortgage insurance premiums, government recording fees/taxes, and inspections. Buyer's should remember, there is no free money, and they will pay to obtain a loan.

Buyers should consider their motivations for wanting the seller to pay their closing cost:

1. Does the buyer NEED the seller to pay their closing cost? Meaning, the buyer has the required lender down payment but not enough to pay their closing cost. Thus, if the seller doesn't pay the closing cost the buyer can't buy the home.

2. Does the buyer have the money to pay their own closing cost but doesn't want to liquidate their cash assets to do so.?

3. Out of principal because "Sellers ALWAYS pay the buyer's closing cost" and it should be expected.

4. Other financial motivating factor that buyer deems beneficial.

Typically, buyers have a 'top dollar' they will pay for a property with all considerations and sellers have a 'bottom line' they will take with all considerations. Whether a seller pays a buyers closing cost or not does not change the seller's 'bottom line.'

Example:

The seller's bottom line is $100,000.  Meaning the seller will take no less than $100,000 with all considerations.  The seller doesn't care if the offer is $105,000 with the seller paying $5000 in buyer's closing cost or if the offer is $100,000 and the seller paying none of the buyer's closing cost. Either way, the seller's net is the SAME in both scenarios.

Buyers should consider the following when asking the seller to pay their closing cost when it is not necessary to purchase:

1.  Does the buyer want a higher loan amount, with higher monthly payments and more interest accruing?

2.  Will rolling the closing cost into the purchase price artificially inflate the property's value?

3.  By rolling closing cost into a loan amount more of the home's equity is eaten up.

4.  Possible loss of negotiation 'power' because the seller perceives the buyer isn't really qualified. Thereby, the seller believes the buyer needs them more than they need the buyer. Thus, the seller does not negotiate as assertively as they would with a more qualified buyer.


Comments are closed.

    Suzanne Walker,
    Author*

    This is my experience, opinion and perspective of the business. I've been in and around all levels of real estate my entire life; all over the world.  After many years of telling the same real estate experiences over and over,  I started a blog to answer the basic questions the average consumer has about real estate. Feel free to contact me anytime to discuss your real estate needs and goals. *Please see the Disclaimer.

    Categories

    All
    Abstract & Title
    Buyer
    Disclaimer
    Environment
    Getting Out Of Contracts
    Gimmicks
    Home Improvements
    Home Inspections
    Homeowners
    Home Values & Appraisals
    Links
    Negotiating Contracts
    Neighbors
    Okc Metro Information
    Perspective
    Real Estate Myths
    Seller

    Archives

    December 2017
    October 2013
    May 2013
    March 2013
    February 2013
    January 2013
    December 2012
    August 2012
    July 2012
    May 2012
    April 2012
    March 2012
    February 2012
    December 2011
    November 2011
    October 2011
    September 2011
    May 2011
    March 2011
    February 2011
    May 2010
    January 2010

S. Walker & Co. , Oklahoma City, OK , 405-792-7878
 © 2018 S. Walker & Co. S. Walker & Co., the S. Walker & Co. logo, the Real Estate. Reimagined. slogan, and the S. Walker & Co. sign are all trademarks or registered trademarks of S. Walker & Co.