Special offer

That Closing Cost Credit Doesn't Grow On Some Tree

By
Industry Observer

Even as our local Olympia area real estate market is tilting more and more toward being a seller's market, buyers asking for a credit toward their closing costs are not uncommon. In some price brackets, it's still very typical to see a buyer ask... and a seller agree... to pay some or all of the buyer's closing costs.

 

 

Money tree

 

But that money for the credit does NOT grow on some wonderful tree - it basically comes out of the seller's pockets at closing. Every dollar a seller pays on behalf of the buyer for closing costs reduces the net that the seller will see from the sale.

And more than once I've had to explain this to buyers who have heard it's "normal" to ask the seller to pay their costs (along with the seller's own costs). They just haven't given any thought to where exactly that credit comes from.

So, in a competitive market like we have, it may be "normal" to ask the seller to pay your closing costs, Mr. and Mrs. Buyer. But since that credit is already a reduction to the seller, know that expecting a closing cost credit AND a big reduction in price as well.....just may not get you the house you want.

 

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Nancy Conner, City Realty Inc,    360-701-1086     nancy@cityrealtyinc.net      

Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

I tell buyers if they can't afford to pay their own closing costs, then they should roll it into their loan because in a seller's market, it is very unlikely that a seller will pay it.

Jun 18, 2013 10:37 AM
Nancy Conner
Olympia, WA
Olympia/Thurston County WA
Hi Elizabeth! Yep - Sellers are always interested in the bottom line figure of what they will net in the sale - so a buyer asking for closing costs is pretty certain to get beat out by competing buyers who are not....all other terms being comparable.
Jun 19, 2013 12:56 AM
Nancy Conner
Olympia, WA
Olympia/Thurston County WA
Valerie, closing cost credits are still fairly common here - but the buyers who have saved up enough to manage their own down payment and closing costs are definitely in a stronger position if there are multiple offers. I won't be surprised if we start seeing sellers being much less willing to chip in on a buyer's behalf as our market strengthens.
Jun 19, 2013 12:59 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs
Many buyers are unaware that the seller has their own set of closing costs. But once explained, some buyers get a little more reasonable!
Jun 19, 2013 03:20 AM
Nancy Conner
Olympia, WA
Olympia/Thurston County WA

You're right Francine - often all it takes is letting a buyer know what the seller will be paying already, and why asking them to pay even more costs for the buyer might not be well received!

Jun 19, 2013 03:51 AM