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Under what circumstances should a buyer ask the seller to pay the closing costs?
Our R.E.Agent wrote for the seller to pay "zero" to closing costs and when asked about it, she said in this area usually the seller pays theirs and buyer pays their own since they are usually related to getting financing. She said that since we are offering less than the asking price and a long closing date, the offer may get a negative reaction from us also asking the seller to pay closing. I just want to bounce this off of you all b/c we have no experience. Thanks.
Location: central, between Pepe's Tacos and Roberto's
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I've always asked for closing costs to be paid by the seller. Every one of my clients asks for closing costs. I haven't gotten them every time, and neither have my clients. The worst they can do is counter without costs, counter with a higher purchase price, or say no. Even banks are paying costs on REO's right now, at least in Vegas they are.
Your RE agent may be correct. However, your post indicates that the offer was made without seller paid costs without your knowledge. Is this true? Was the option even brought up? Customary or not, you are the one buying the home and as such it is what YOU want to offer, not what your RE agent wants you to offer.
Thanks for the reply. Thats what I thought but its good to hear it from someone else. The agent didnt ask us what we wanted to put in for that part of the offer, and we didnt think to mention it until we saw it in type, on the offer.I will ask her to redo it with the change and hope for the best - as long as it cant result in something bad happening such as the sellers never wanting to contemplate another offer from us after turning it away.
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,847,329 times
Reputation: 958
Quote:
Originally Posted by jctx
Thanks for the reply. Thats what I thought but its good to hear it from someone else. The agent didnt ask us what we wanted to put in for that part of the offer, and we didnt think to mention it until we saw it in type, on the offer.I will ask her to redo it with the change and hope for the best - as long as it cant result in something bad happening such as the sellers never wanting to contemplate another offer from us after turning it away.
I can't say that it won't happen though. It might be possible that they will be insulted by the offer and not want to deal. However, it has been my experience that they will usually accept or counter. If they counter it will be with a higher price or with no costs. Again though, I cannot definitively say that they won't laugh at your offer and shred it.
If they laugh and shred, can we simply submit another offer?
Also, we asked the RE Agent if we could submit a letter to be given to the sellers indicating that we are not intending to insult them but rather that we've fallen in love with their home and are making an attempt to buy it in the event that they would sell it to us at a price we can afford to pay. The RE Agent said this was acceptable, and that sometimes a little bit of story on the buyer's behalf can make a difference to the sellers and it doesnt hurt to try (its also the truth, and I hope i can come across that way in the note - suggestions are very much welcomed!)
There are different ways to structure an offer, but ultimately most sellers only care about the bottom line of the offer, the financial strength of the buyer, and having quick closings with the fewest contingencies. For example, an offer of $180k with a $5k seller's contribution equates to a net offer of $175k.
However, the important consideration concerns why a buyer is asking for closing costs. Is he wanting to come to closing with very little or no money out-of-pocket, i.e. zero down AND rolling closing costs into the loan? If so, this is not an ideal situation for the seller because this type of buyer would have a much harder time getting a loan for a similarly qualified buyer making a 20% down payment. In addition, the appraisal would need to cover the entire sales price, i.e. $180k, rather than $175k from the example given above. This also makes the loan riskier. For example, what if the appraised value comes in at $176k? Even though the seller agreed to a $175k bottom line price, the loan needs to be approved at $180k, and since the buyer cannot fork over the extra $4k (remember, he has very little money to come to closing), then either the seller needs to or the deal is bust.
Disclaimer: the situation described above is just a hypothetical example. In today's world, 100% loans are virtually non-existent and buyers are required to come up with a minimum 3.5% down payment for FHA loans.
Let me wrap my brain around this...
The appraisal must come in at the sales price or higher. If it doesnt, either the buyer or the seller must make up the difference, or the lender will not finance the home. This is all the more reason why I would be interested in getting an offer accepted for less than the asking price? Then it seems that the odds that the home will appraise appropriately are higher. Or am I misunderstanding?
I wouldn't write a letter in a buyer's market, that leaves too much exposure and tips off the seller you may be willing to actually pay more.
It wouldn't hurt to call another real estate firm blind and talk to a real estate agent. Tell her you are thinking about relocated to that town or possibly another and wanted to get the feel for what is typical for that market-place, and ask about 6 or 7 questions, one being, are sellers paying closing costs? What if the offer were "X" below list, are they still paying?
Is it possible your agent is with the same company that has the home listed? Maybe she knows something you don't, or, she doesn't want a negotiation, she wants a sure bet.
Your gut is telling you something isn't quite right or you would not have posted. Maybe you should instruct her to put $5000 to be paid by seller. (this is where I would want to know how many days the home has been on the market and what is the typical days on market for that area).
If they laugh and shred, can we simply submit another offer?
Also, we asked the RE Agent if we could submit a letter to be given to the sellers indicating that we are not intending to insult them but rather that we've fallen in love with their home and are making an attempt to buy it in the event that they would sell it to us at a price we can afford to pay. The RE Agent said this was acceptable, and that sometimes a little bit of story on the buyer's behalf can make a difference to the sellers and it doesnt hurt to try (its also the truth, and I hope i can come across that way in the note - suggestions are very much welcomed!)
We tried that once and the letter totally pissed off the sellers and insulted them. The exact opposite of our intention. So, if you do this, be very careful what you say!
On the flip side, I know people who were selling their house they had lived in for 35 years. They really liked the young couple that wanted to buy it - they wanted to start a family in that house and that appealed to my friends. However, the price - while much lower than the sellers wanted - was within the comps for the neighborhood. While liking the couple mattered, $$ was the bottom line.
Under what circumstances should a buyer ask the seller to pay the closing costs?
Anytime they don't want to come up with the money themselves. Any logical seller should be willing to do so as it will be reflected in the sales price.
It sounds like your agent needs to listen a little better to your wants.
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