Is it a good idea or a bad idea to ask for a seller's assist when making an offer on a home?
The best way to look at a seller’s assist is that it is real money to the seller. For example an offer of $370,000 with a 3% sellers assist ($11,100) is just about the same thing to the seller as an offer of $358,900 without a sellers assist, because in both cases the final net amount they receive in their check at closing is $358,900 (minus their closing costs).
Reasons for asking for a seller’s assist…
You will bring less money to closing, for example if you were going to have to bring a check for down payment and closing costs for $20,000 and instead you get a seller’s assist of $10,000, then you will only need to bring a check for $10,000 to closing – so you can spend the extra money to make repairs or improvements to the home, buy furniture or other things you want for the house, or just not spend it at all and have extra money left in your savings account.
Reasons for NOT asking for a seller’s assist…
- Usually the actual price you pay will be higher since the seller is just looking at a seller’s assist as a reduction in the check they get at closing. So if they would accept $360,000 without a sellers assist, they probably would want at least $370,000 with the sellers assist.
- Since the purchase price is higher both the buyer and seller will pay a higher transfer tax since it is based on a percentage of the purchase price. Also the seller paid commission and the buyer paid title insurance are also percentage based of the sale price, so those go up too. (So the example at the top is not an exact match because some of the percent based costs do go up with a higher sale price)
- If the county re-assesses your property for taxing purposes in the future they will see a higher price and could reassess your higher = higher property taxes in the future.
- The property will have to appraise for the mortgage at the higher sale price that was negotiated to make room for the seller's assist, because the mortgage lender is still going to be doing the loan based on the purchase price, not including the seller's assist. This isn’t a problem if the appraisal comes in at value, but if it is low then the seller may want to remove the sellers assist or the buyer has to come up with extra cash to bridge the gap between sale price and appraised value, which completely negates the seller's assist.
Bottom line, if you NEED the seller’s assist because you don’t have enough money to cover your down payment or closing costs, or if you really WANT it because you feel more comfortable with extra money in the bank, even if it will cost you a little extra in the long run, then you should ask for it.
But if it’s more of a nice to have, not a need to have, you might be better off not asking for it.