What Are The Advantages Of Seller Paid Closing Costs?

Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

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.



 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

Posted by

George Souto
NMLS# 65149

C (860) 573-1308
CALL 7 Days/Wk
Fax (860) 760-6891

Email Me
About Me
My Blog

I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing needs in
CT, RI, MA, NH, and a FL Licensed Lender

I can assist you with your Conventional,
FHA, CHFA, VA, USDA, & 203K loan programs.

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.


Comments (33)

Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

it happens and comes up now and then and it is a good tool to move things forward and seal deals...good post

Jul 14, 2013 11:31 PM
Potranco Realty
Potranco Realty - San Antonio, TX
"Sold with Potranco Realty"

George, I like the way you explained this and I'm sure many needed to know. I often get asked for the seller to pay closing cost and use your analogy to explain it to my sellers. Recently we did have one home that didn't appraise for the value but in the end it all worked out and closed. Have a great week...

Jul 14, 2013 11:54 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

George:  Your words ... "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" ... are so very true.  A seller's willingness to work this agreement out carries such weight and is such a great service to the new Buyer.  With rates being as low as they are currently, it's paying pennies on the dollar for peace of mind and purchase power ... what a gift the Seller makes possible!!

Great explanation of this valuable negotiation tool ...


Jul 15, 2013 12:09 AM
Rosie Crow
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX
Rosie the Realtor: Client focused, results driven
Thanks for blogging about this topic! Great info!
Jul 15, 2013 12:14 AM
Shay Campbell
Universal American Mortgage Company - Raleigh, NC
Raleigh, NC

George I always enjoy your posts.  I have incorporated many of your posts in my sales presentations. Thanks again.

Jul 15, 2013 12:18 AM
Jeff Fisher
PureWest Real Estate - Whitefish, MT

I enjoyed your explanation and bog post, and plan to share with others.  Win Win's are good for everyone!

Jul 15, 2013 12:35 AM
Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

I think if the sellers are able to help and are willng this is a great thing for the buyers; however, that all depends on the offer.

Many times buyers will ask for thousands off the asking price and closing cost assistance too...and that rarely works :)!  Great post!

Jul 15, 2013 12:39 AM
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Good Morning George, it's essential to include seller concessions in mid range prices prior to listing the home. Most Realtors and homeowners shy away from offering to pay buyer's closing costs, however, it may help to get the home sold faster. Great information! I will re-blog.

Jul 15, 2013 12:41 AM
Harry F. D'Elia III
WEDO Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

One advantage is to ensure the closing of the home and helping out a fellow buyer.

Jul 15, 2013 12:54 AM
Roger Stensland
Keller Williams Realty Puget Sound - Maple Valley, WA
Let's Move!

Even if the price of the house needs to be raised by the amount of the closing costs, it is still a great tool that allows the purchaser to finance the closing costs.

Jul 15, 2013 01:17 AM
Pat & Steve Pribisko
Keller Williams Greater Cleveland West - Westlake, OH

George, this is an excellent blog for sellers and buyers.  It's very easy to understand.  The Agent probably called you because she didn't want her Broker to know she didn't know the answer.

Jul 15, 2013 01:49 AM
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Hi George: You are absolutely correct about the peril of adding the concession to the purchase price if the property can't get appraised for that xxx amount. If both realtors-listing and selling side--are knowledgeable of the market trend, they can easily identify if the seller's concession will pose as a problem.

Great post as usual.


Jul 15, 2013 02:39 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

"Strange" never!

Unusual yes.

"Sellers need as large a pool of Buyers as they can possibly get." Such good advise is both strange and unusual!

I coul;dn't say it any better myself because it's the same thing I've been saying since '74.


Jul 15, 2013 03:00 AM
Steven Brand
Hancock Mtg Partners - Stillwater, MN
NMLS# 261849

Good post.  Its all about the NET that the seller gets at the bottom of the HUD.   Contributing towards closing costs should just be assumed to be a standard procedure. 

Jul 15, 2013 03:56 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I'm not saying this to bust your chops, but you wrote "it accrued to me" The reason I bring it up is that I did the very same thing the other day with the same word.  Buyers are putting up a lot of money, or taking on debt in order for the seller to sell, usually for a higher price than they paid for the place.  They want their price, my clients want their closing costs as a seller's concession.  Seems fair to me!  ;-)

Jul 15, 2013 04:00 AM
Venus Howard
Vindiola Group - Commerce City, CO

I have a current buyer who needed closing costs, the agent actually told me that lenders don't need sellers to pay closing costs anymore because they can wrap everything into the mortgage?  What?  I negotiated with her and still was able to get my buyers their 3% in closing costs.  Thanks for your post!  I might refer to it if I have this issue come up again.

Jul 15, 2013 06:43 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

George, Most of our sales that have financing have seller paid closing costs with some sellers paying all closing costs and all prepaids. It have become custom and is a real help to the buyers in the area.

Jul 15, 2013 10:58 AM
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Hello George,

Seller contributions are a "win-win" for both parties as my client's know the end net is what is important.

Jul 15, 2013 11:04 AM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

George, great share...so many realtors think the seller pays for closing costs!!  This very day I was trying to explain this to an associate who was new...

Jul 15, 2013 12:15 PM
Patricia Feager, MBA, CRS, GRI,MRP
Selling Homes Changing Lives


I also like how you explained it, so clearly and concisely too!


If not explained correctly, a Seller could lose out on a great sale. That's why it's always best to go with an experienced REALTOR and Mortgage Lender too!

Jul 16, 2013 02:39 AM