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Is it better to have the seller pay closing costs?

Reblogger
Real Estate Agent with eXp Realty

I think that the reality will someday be that buyers will have no choice except to pay for their own closing cost.  As more sellers become cash strapped, seller contributions are not the luxury that they once were and yet people still treat it that way.

Sure if we can get the seller to pay some or all of the buyer's closing cost, I'm taking it and running with it.  However, seller contribution to closing cost is not a right, it's more closely related to privilege or at the very least.....a gift.   When is the last time you heard a buyer paying seller's closing cost?  

Original content by Tammy Lankford, GREC# 169695

"I want the seller to pay the closing costs, don't I?"  That is a question I get from both first time and experienced buyers.  And my advise to them may not be the same as other agents, but after you read what my advise is and the WHY behind it, perhaps you will change your mind about it too. 

With it being the rare exception buyers and lenders are the only ones who come to the closing table with money.  In my 20 years in this business I can count the time seller brought funds to the table on one hand.  So lets talk frankly about the sellers paying your closing costs.

When a contract says sellers will contribute $X for purchaser closing costs then the seller looks at your offer and if it works into the net he is willing to accept he generally agrees.  But you can bet your sweet bippy that if you offered that same $X less for a purchase price with the seller paying no closing costs he'd still take your offer. 

Buyers and lenders fund closings.  So if you have the savings to pay the down payment and closing costs, that's your best bet.  If you fall short of having enough funds to pay the down payment and your closing costs is the only time you should ask for seller assistance.  Because I'll say it again buyers and lenders fund closings.  So if you pay more for the house in order for the seller to "pay" some of your closing costs it's really like financing your closing costs for the life of the loan.  That's right, you heard me, you're not only still paying them yourself, but you are borrowing the money from the bank to give to the seller first before he gives it back to you to pay the closing costs. 

Now does that make any sense to you at all?  So again, it's ALWAYS my advice if you have the funds to make a down payment and pay the closing costs that you do not ask for seller contributions.   Because the buyer comes to closing with a check, the lender sends funds and the sellers leave with a *check. 

*Short Sales are not included in this scenario, those sellers do not leave closing with a check.

So what are your thoughts of buyers asking sellers to pay closing costs?

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Tammy Lankford, Broker/Owner

 

Broker License # 169695  Lane Realty License # H-11420

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