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Error in the article.
VA Buyers in North Carolina can pay for termite inspections.
Generally, it is the lender whose fees are messed up who rock the boat and blame VA for sellers having to pay for termite inspections.
So many people harbor great disrespect for veterans and refuse to accommodate VA borrowers, and many just misunderstand the loan product and fees. When I write a VA deal, I tell the listing agent or seller that there will be no extra fees to them due to the VA loan, but if there are, I will pay them. I haven't had to yet, other than a $90 pop as a gift to my client.
I agree with you on VA loans and have completed many transactions successfully with VA clients and buyers!
No, I’m not talking about the commission paid to the agents. That was separate from the 3% closing costs paid on behalf of the buyer.
We are new to real estate transactions and curious about this. I thought that the closing costs were largely paid by the seller anyway (largely the agent commissions plus other fees, etc.). What are the typical closing costs covered by the buyer? We are in the process of selling my fiance's childhood home in upstate NY and have just accepted an offer. Should we be expecting the buyer to ask us to contribute an additional amount/percentage at closing? Would the seller only do so in a situation where the house is appraised below the price offered (i.e. are you doing it as an incentive to the buyer in order to close the deal)?
On the flip side, we will be looking to buy for the first time within the next year or so in the very hot Dallas market. As buyers, I'm curious what grounds would we have to ask for an additional amount contributed by the seller at closing?
We are new to real estate transactions and curious about this. I thought that the closing costs were largely paid by the seller anyway (largely the agent commissions plus other fees, etc.). What are the typical closing costs covered by the buyer? We are in the process of selling my fiance's childhood home in upstate NY and have just accepted an offer.
See below for an example of closing costs that the buyer might have to pay at settlement. These fees can add up to many thousands of dollars. These fees do not include listing agent/buyer agent commissions which are both deducted from the money paid to the seller at closing.
Loan points
Appraisal fee
Credit Report
Lender's Title Insurance
Owner's Title Insurance
Title Search
Title Settlement Fee
Recording Fees and Other Taxes
Tax Stamps for County/State Deeds
State Transfer Tax
Prepaid Interest
Underwriting fee
Binder Fee
Courier Fee
Doc Prep Fee
Judgement Reports
Lien certificate
Survey
Homeowner's Insurance
Admin fee
HOA fee
Property Taxes
Mortgage Insurance
Quote:
Should we be expecting the buyer to ask us to contribute an additional amount/percentage at closing? Would the seller only do so in a situation where the house is appraised below the price offered (i.e. are you doing it as an incentive to the buyer in order to close the deal)?
Not all buyers ask for assistance with closing costs, but it's not uncommon in my area at certain price points. I was selling a townhome to a first time homebuyer, so I could understand that they might not have had tons of cash to use for closing costs. It doesn't always hurt a seller to pay a buyer's closing costs. For instance, if I list my home for $300K and I receive an offer for $315K minus 3% closing costs ($9450), I would have $305,550 left over after deducting the closing costs. That would be better for me than if I had just received an offer of $300K and the buyer paid their own closing costs. So in my case, I agreed to pay the buyer's closing costs because he offered me more than 30K over my asking price. As I said, it didn't appraise for quite that high, but I still ended up receiving more than my asking price so there was some cushion to contribute towards his closing costs.
Quote:
On the flip side, we will be looking to buy for the first time within the next year or so in the very hot Dallas market. As buyers, I'm curious what grounds would we have to ask for an additional amount contributed by the seller at closing?
In a hot market, I don't recommend asking the seller to contribute to your closing costs if you have enough money to cover them yourself. If you don't have enough money to cover them yourself, you need to offer the seller more money than what they're asking for (i.e. enough that paying your closing costs won't negatively affect their profit). Once again, on a $300K house, an offer of $291K with you paying your own closing costs would be the same as if you offered $300K and asked them to pay 3% towards your closing costs. However, if you offered $310K and asked them to pay 3% closing costs, they may be more likely to agree to it. Of course if someone else offers $305K and doesn't ask for help with closing costs, you'd lose out on the house.
We agreed with paying the VA fees that the buyer cannot pay being we were getting full asking price. We were prepared to drop our price if necessary. We are selling it ourselves so there are no realtor fees. From what the closing company gave us these fees would still be less than what we planning on dropping the price to. The buyer was required to pay $8,000 to VA for the loan which was added to the loan amount.
2 - Asking price with an $8,000 contribution to buyer's closing costs. Nope.
3 - Asking price with a 3% contribution to buyer's closing costs. Nope.
4.) Asking price with a spiff to go up to $15,000 over the ask based on the appraisal. Yup.
Got a good appraisal and $15,000 additional out of the sale. The asking price offers with money back to the buyers mystified both myself and my real estate attorney. In our market properties are routinely selling at list price or higher and going under contract within a day or two of listing (ours was three days) so the approach to sneak in an incentive for the buyer just didn't make a lot of sense. Why wouldn't they just make an offer of the asking price less what they wanted towards closing?
It seemed like some really used car puffy shirt type salesman approach, like getting the seller worked up because they were making a full price offer and hoping the seller would be so enamored of it that they wouldn't look at the conditions on the last page of the contract and see where the buyer was getting money back from them.
They're not trying to get anything over on you. It's all they can afford, or all they want to pay.... one or the other, I've written offers for both kinds of buyers.
If we stick with them, we can hopefully find them one they can afford to win, in time. We try.
They're not trying to get anything over on you. It's all they can afford, or all they want to pay.... one or the other, I've written offers for both kinds of buyers.
If we stick with them, we can hopefully find them one they can afford to win, in time. We try.
I understand, but it just seems sort of sneaky. Why not be up front and offer what you can instead of trying to get money out of the seller on the back end?
Because they don't have the cash upfront to pay those expenses out of pocket, or they're holding the cash they do have for reasons of their own. It's really not sneaky. It's a difference in the timing and source of funds. One always needs to look at the WHOLE offer, not just the purchase price.
We discuss these issues all the time with clients who are at or near their limit and trying to sell or find a place in this competitive market.
Last edited by Diana Holbrook; 02-11-2021 at 11:21 AM..
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From a mortgage broker in Florida
We try.
