Technically?....Nothing except the pro-rated portion of the property taxes due and even that is not a requirement but more of a courtesy. There are no requirements at all for a seller to pay anything. Many aspects of a real estate transaction are routine for most experienced agents. However, for buyers and sellers, a purchase contract and the costs involved are not easily understood. The responsibility of a professional real estate agent is to help navigate the terms and costs associated with the transaction.
So let's say you have a contract and the seller has agreed to pay some of the costs to close the transaction (sometimes referred to as "seller concessions")....now what? What is considered customary? What is not? What should the seller pay and what should the buyer pay? This can be a dicey situation and sometimes can make the difference between a successful close or a negotiation that falls apart.
Since there are no hard and fast rules, here are a few things to know. Please keep in mind, this is not meant to be a substitute for legal advice. I recommend a qualified real estate expert to help with the contract and contract negotiation. Below is a short list of items that can be included to be paid by the seller of a property. It is usually limited to a specific dollar amount or a percentage of the final sales price. Again absent of any rules, the general rule for calculating closing costs is usually 2% of the purchase price. This is a good rule of thumb to determine if the charges are in line or not.
One of the great things about seller paid concessions is that it can be a tool for helping negotiate the purchase and or sale of a house. There does have to be enough equity to pay them and buyers should be aware that if there is financing, it is rolled into the final note and payment. However, it can help cash strapped buyers from shelling out more money after down payment and reserve requirements from the lender.
Some of the costs (non-recurring) that are allowed by lenders:
Title insurance
Owners title insurance policy
Lenders title insurance
Appraisal fees
Settlement fees
Search and abstract fees
Notary /Attorney fees
Courier fees
Wire fees
Odd days interest or accrued interest (amount of interest calculated from the day of closing to the end of the month 30 days before the 1st payment is due)
Origination fees
Prorated taxes (the amount of taxes due from the first of the year to the closing date)
Closing cost items (recurring) NOT allowed to be included in seller concessions by most lenders
Hazard insurance premiums
Property taxes set aside in an escrow reserve account with the lender for future payment
As always, stay sharp and keep looking out for the best interest of your clients!
Thanks for stopping by
To your success
LEADING EDGE TITLE SOLUTIONS
Matching experience with technology to give
you the edge to be a mortgage industry leader
Bo Hussung
Vice President of Sales
phone ~ 615-438-7300 fax ~ 678-261-1594
email me ~ bhussung@cogentca.com
web ~ www.cogentca.com
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