What Are The Advantages Of Seller Paid Closing Costs?

I got a call on Friday from a Realtor who must be new to the business.  She called me and wanted to know What Are The Advantages Of Seller Paid Closing Costs?  I thought that it was strange she would be asking me that question instead of her Broker, but I love to get questions from Realtors, so I was not going to pass up the opportunity to hopefully start a relationship with a possibly new referral partner.

After giving her my opinion of what the advantages are of Seller Paid Closing Costs for both Buyers and Sellers, it accrued to me if this new Realtor had that question, then others might as well.  So you guessed it, an idea for a blog.

Seller Paid Closing Costs, can be a tool and an advantage for both Sellers and Buyers in several ways, but for the purpose of this blog I will stick to just a few of the main reasons.

What Are The Advantages Of Seller Paid Closing Costs For Buyers?

Buyers, especially First Time Homebuyers many times have very little money for both the Downpayment and the Closing Costs.  Even those that do, will generally be left with very little or no money if they pay for both the Downpayment and the Closing Costs.  If the Buyers are First Time Homebuyers they might be able to qualify for a State Bonded Mortgage Program which will allow them to borrow the Downpayment and Closing Costs. Also if they are Veterans, or purchasing in a town that is eligible for USDA Mortgages, that could solve the problem as well.  However, these programs are tougher to qualify for than a regular FHA, or Conventional Loan, and they might not meet the requirements.  This is where Seller Paid Closing Costs can be a huge help.

By getting the Seller to agree to contribute towards the Closing Costs, whether impart or the total, the Buyer is now able to purchase the home and retain some money.  This will inable the Buyer to either make improvements to the property, or just simply have a little money in reserve to be able to take care of unexpected emergencies.  Having a little bit of money left in the bank can be the difference between being able to pay the mortgage, or going into default if an emergency arises.

What Are The Advantages Of Seller Paid Closing Costs For Sellers?

Sellers need as large a pool of Buyers as they can possibly get.  By increasing the pool of Buyers available to purchase their property, they increase their chances for multiple offers on the property, and getting the highest selling price for their house.  Being willing to consider paying some or all of the Buyers Closing Costs increases that pool of Buyers who might not be able to purchase the property otherwise. 

Those of us who have been in the business for a while know very well that in reality the Seller really does not pay the Buyers Closing Cost.  What really happens is the Seller provides the Buyer with an avenue to finance the Closing Cost.  For example the price the Seller was willing to finally sell the house at is increased by the amount of the Closing Costs.  Therefore, the Sellers almost nets the amount that they would have agreed to sell the property for, and the Buyer is able to purchase a property they may not have able to with out this assistance.

Seller Paid Closing Costs are a win, win for both the Buyer and the Seller.  The danger of course is the possibility the property will not appraise high enough to be able to cover the the Closing Costs.  However, if the Listing Realtor did the proper job of pricing the property at a price which is supported by other comparable sales, then this should not be as much of a concern.  If the Realtor took an overpriced listing, then Huston We Have A Problem.

I could provide more reasons for What Are The Advantages Of Seller Paid Closing Costs? But I thing the above reasons are enough to show why Seller Paid Closing Costs can be an advantage to both Buyers and Sellers.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com