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But has far as the market views things, wouldn't the "real price" still be considered $100,000? Under ordinary circumstances, the seller would sell for $100,000 and pay that $5,000 in closing costs out of his own pocket.
In this case the seller has on the sly offered $95,000 for the house with an additional $5,000 in closing costs.
Either way, the seller is getting $100,000 minus closing costs and the buyer is still spending $100,000 and getting a house. Setting aside that $5k for closing costs rather home price may affect the financing amounts and a have a small effect on realtor fees, but when it comes down to the total deal price, it's the same either way.
You can say that the "real sales price" is $95,000, but it's not. The seller sold for $95,000 plus $5,000 credited toward closing costs, or $100,000. It's not like that $5,000 wasn't considered by the seller when agreeing to the offer.
What happens when seller #2 comes along and says..."seller #1 got $100,000 for his house so I want that for mine" but he isn't aware that seller #1 got that $100,000 but ALSO paid $5,000 in closing costs? Seller #1 NETTED $95,000 less fees.
If the house had 1000 sq. ft....price paid was $100,000...dollar per sq. comes to $100 per sq. ft. but if the price paid was $95,000...the real dollar per sq. ft. comes to $95 per sq. ft. It makes a difference when seller #2 wants to sell his 1200 sq. ft. home.
However, even if the seller gave $5,000 to buyer in closing costs, the house must still APPRAISE for $100,000.
^^^You're absolutely right. Somehow I had that backwards and was reading the conversation as talking about a buyer paying $5,000 towards a seller's closing costs. Didn't really understand that scenario, but somehow still thought that's what you folks were talking about.
But yes, completely agree...when the seller gives closing cost money back to sellers it artificially inflates the apparent sales price of the house.
MLS shows that home sold for $100,000 with seller paying $5,000 in closing costs.
Real sales price of the home is $95,000.
Make sense?
Vicki
That seems a little unethical to record a house being sold for more that what was agreed. I assumed that closing costs had no affect on the recorded purchase price--seems like an underhanded tactic to me. In any case, thanks for explaining that.
That seems a little unethical to record a house being sold for more that what was agreed. I assumed that closing costs had no affect on the recorded purchase price--seems like an underhanded tactic to me. In any case, thanks for explaining that.
Once a home has sold and the deed is recorded, all that Wake County sees is that the house sold for x amount. They don't see ANY seller consessions. They don't see what closing costs were paid or if the refrigerator conveyed. They don't see if the seller paid $489 for a buyer's home warranty. It is just the way it is.
Vicki
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