Seller Paid Closing Costs, What's Happening In Billings Montana?

For many years, seller's have been asked to pay some or all of the closing costs and prepaids the buyer incurs in order to get an accepted contract.  The market acceptance of this practice depends on multiple factors, one of which includes the question; what is the standard for the area?  Just be careful to consider that seller paid closing costs are really a PRICE NEGOTIATION between the buyer and the seller, the buyer is bringing the funding for these costs, the seller is accepting the bottom line deduction from the sales price.

If the accepted selling price of a property is $180,000 with the seller's paying $5,000 in closing costs and prepaids:

• The seller is agreeing to credit the buyer for $5,000 in closing costs and prepaids
• The purchase price is $180,000, not $175,000
• All items in the contract that are calculated on the "purchase sales price" are valued from the $180,000, that includes title insurance and brokerage fees
• Total charges for the purchase include the $180,000 purchase sales price plus the closing costs and prepaids, let's say $5,000:  $180,000 plus $5,000 equals $185,000
• Total proceeds for the seller work this way:  purchase sales price $180,000 minus $5,000 equals $175,000

(the above numbers are an example for demonstration purposes only, and do not include all of the items charged and credited on a settlement statement.  The reader is encouraged to get a Good Faith Estimate from their lender as a buyer, and an estimated seller's charges from their Real Estate Professional for each transaction, as they all include various inclusions and exclusions)

In our market in Billings Montana, seller paid closing costs continue to be a negotiation of price between the buyer and the sellers.  The appraiser's in our market look at the selling price, along with the negotiated seller paid closing costs and prepaids, and look for comparable's in our market that represent similar values.  In our average price range ($194,000) and lower, we are seeing 0 to 3%, depending again, on the comparable's in the area.