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Huge benefit if they are short of cash for closing costs and can otherwise make the down payment and monthly payments, or want to save cash for after purchase home costs (remodeling, furniture, etc).
So is this just a way for the buyers to take "cash out" of the total loan amount at closing? I sort of think I get it now. By the way, we sold our house in NY. Also, a friend of mine who recently bought a house asked for $12,000 towards closing, also in NY. So, I think it's a popular practice, at least in the Hudson Valley region.
So is this just a way for the buyers to take "cash out" of the total loan amount at closing?
Correct, but the cash must be applied to actual closing costs. They can't walk away with cash from the sale. If there is any "spare" cash, it's usually applied to related costs such as buying down the interest rate.
Pre-boom in these parts, the rule of thumb was that seller paid half the document stamp fee (about 2% total, so sellers paid 1%) and half the title insurance. That faded out during the boom when a seller could not only refuse to pay any non-VA mandated closing costs but also demand potential buyers write a letter in iambic pentameter explaining how much their dog would love the back yard in order to get to contract.
These days, I suspect it's all over the map based on how much someone really needed to sell.
Because it does come down to whether you can afford it. The dreary attempts from the buyer's realtor to play the sad stories, they don't have enough to put down; they'll need a new fence; they have two little kids and love this house....
Outrageous, ludicrous, nonsensical. I am not in a position to take lowball offers because the buyer can't get a mortgage for enough if they have to take closing costs out of their pockets -- which back in my parents' and grandparents' days -- were the norm. Strangers didn't help you finance your house by taking less so the mortgage could be pumped up with the closing costs they needed.
Nah, I get what you are all saying, and please understand that I come from the same region as 3DogNight where if you don't have 20% or more to put down, forget about it. Never mind asking for Closing Costs! They would look at you like you had 2 heads. That was why I initially started this post - I was horrified by it on that HGTV show.
But now I get it. I also understand that it is a regional thang! Also, I now understand that if I am the seller, it should not matter to me in the LEAST as long as I can roll the costs into the overall selling price. Why should I care how the buyer manages their money?
But - from a buyer's perspective, asking for this closing cost and asking for it to be part of the overall price - I still do not get it. As I mentioned before, you take that $5k (or whatever) and times it by 5.25% (or whatever) and you times it by the life of the mortgage and I am telling you, that short of going to a loan shark, you are actually paying a very big price for that $5k - from a BUYER'S point of view.
And I truly do not think that a lot of the young people buying in the regions where this is acceptable have fully calculated what those "closing costs" are truly costing them. I am ALL about live and let live - and it certainly harms me in no way - but I truly do not get the financial sense in rolling those closing costs into your overall mortgage.
Difference is, buyers are NOT asking for it to be tacked on to the selling price. They are shooting a stupid offer, 20% or so less than asking which is already low and priced to sell, then asking you to put up the closing costs which basically ate even further into the offer.
My girlfriend in FL, born and raised there, was buying a new house and the seller was a guy from NJ. She sent me flaming emails about how this NJ jerk is being soooo cheap, he won't even pay for closing costs...I told her he isn't being cheap, this is not a standard practice in NJ or where I'm from either --- there was a serious communication issue with that sale. She thought he was being stubborn and cheap, he thought she had been watching too much CNN.
Because it does come down to whether you can afford it. The dreary attempts from the buyer's realtor to play the sad stories, they don't have enough to put down; they'll need a new fence; they have two little kids and love this house....
Outrageous, ludicrous, nonsensical. I am not in a position to take lowball offers because the buyer can't get a mortgage for enough if they have to take closing costs out of their pockets -- which back in my parents' and grandparents' days -- were the norm. Strangers didn't help you finance your house by taking less so the mortgage could be pumped up with the closing costs they needed.
You changed the topic.
The topic was closing costs assistance, not "lowball offers."
They are not at all the same thing.
I think it is hardly "ludicrous" to sell a home at an acceptable net proceeds to the seller just because the buyer finances their closing costs in the loan.
Do I wish all buyers had 20% or 30% to put into a transaction? Sure. But I think everyone should remember their role in a transaction.
Sellers should Sell, not attempt to engineer society through their sale, not attempt to create, manage and control activities on both sides of the transaction.
Of course, I am a HUGE believer in property rights. A property owner should be free to disqualify as many buyers as they would like for emotional and subjective reasons, and to restrict their sale opportunity and keep their property as they choose as long as they like.
All subject to Fair Housing parameters, of course.
Engineer society? You're a hoot. I could care less if the buyers end up on the street in six months through their own financial mismanagement.
However, under the advice of my realtor, if I have priced my house accordingly, I'm not going to take it on the chin when an offer at my lowest asking price comes in with tacked on ridiculousness like closing costs, etc...things that will be costing me money since I am already offering the house at my bottom limit. As we told many realtors and their prospective buyers, if they have to beg for so much money to be drawn out of the transaction, go find a lower price range to shop in.
We will not see eye to eye on this because we have competing interests. You are interested in just the sale, not my financial well-being and I am interested in my financial well-being, not your sale or the buyer. The sale will happen when it happens, not when I get my arm twisted to make it happen.
Engineer society? You're a hoot. I could care less if the buyers end up on the street in six months through their own financial mismanagement.
However, under the advice of my realtor, if I have priced my house accordingly, I'm not going to take it on the chin when an offer at my lowest asking price comes in with tacked on ridiculousness like closing costs, etc...things that will be costing me money since I am already offering the house at my bottom limit. As we told many realtors and their prospective buyers, if they have to beg for so much money to be drawn out of the transaction, go find a lower price range to shop in.
We will not see eye to eye on this because we have competing interests. You are interested in just the sale, not my financial well-being and I am interested in my financial well-being, not your sale or the buyer. The sale will happen when it happens, not when I get my arm twisted to make it happen.
So you priced the house right at your bottom limit and are surprised that offers are coming in below that?
Did you or your agent think to counter back on those offers above your asking price where the closing costs paid would bring it down to where you want to be or did you just blow these offers off because they did not conform to you idea of what an offer should include or exclude.
So you priced the house right at your bottom limit and are surprised that offers are coming in below that?
Did you or your agent think to counter back on those offers above your asking price where the closing costs paid would bring it down to where you want to be or did you just blow these offers off because they did not conform to you idea of what an offer should include or exclude.
No actually it didn't start out that low, the price was reduced after less than 30 days at the advice of my realtor. And the only thing she came back with was those sob stories I mentioned earlier. We countered back -- literally had to beat the agent to send back these counteroffers, she kept refusing -- they said they couldn't afford it, so we told them to find another house in their price range. They hammered every day for 2 weeks they *HAD* to have *THIS* house, blah blah blah...faxed and called multiple times a day. So we lost those exact closing costs off our bottom price.
I really am not looking for agreement with my (and my husband's even stronger) opinion on the purpose of closing costs in a transaction, and how it is used as a tool to hammer people in a transaction in our experience. Our collective opinion is, we aren't subsidizing anyone else's dreams.
I came on here to give Cokatie an opinion from someone who is on the receiving end of something which is out of the ordinary to them.
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