What Happens if the Seller Credit Exceeds Buyer's Closing Costs?

Real Estate Agent with RE/MAX Gold DRE #00697006

I called a mortgage loan officer yesterday to try to assist in a referral situation because the MLO was not returning the agent's calls. The agent allegedly tried to call the MLO all morning and no response, no return voice mail calls.

I called at 1:15 PM and the MLO immediately picked up the call, even though the MLO was in the middle of a settlement closing, or so the MLO said. I think the MLO saw a phone number on the phone that wasn't the buyer's agent or any other person the MLO knew and figured it might be a new customer, so the MLO answered the phone.

Last time I bet that happens.

Something buyers might not realize is a seller cannot pay any part of a borrower's down payment. Agents can't pay it either, nor can lenders. Further, lenders will not allow a credit toward repairs. Which is usually why there is a seller credit involved.

But what happens when the closing credit is larger than the buyer's closing costs? Well, there are solutions when the closing cost credit exceeds the buyer's closing costs. There are ways to address this issue that make sense for all sides of the transaction, including lowering the purchase price by the amount of the deficiency. You can read more in my personal blog today at this link: Squeeze Every Dime From a Seller Credit to Buyer Closing Costs.

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Weintraub and Wallace Realtors



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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.


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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Good morning, Elizabeth - when closing costs are a part of the negotiation process in a transaction, addressing the issue with the lender upfront is a smart move.   I would expect nothing less from you as you understand the process inside-out.  

Jan 31, 2017 10:42 AM #1
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Michael Jacobs Yes, we have learned over the years you can't just send the addendum to the lender and figure they will read it and make sure the closing costs fit the credit.

Jan 31, 2017 06:43 PM #2
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

I hope home buyers will read your post. Thank you for the great tips.

Feb 01, 2017 03:38 AM #3
Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

This can be a tricky situation.  This is why you need a good lender on the buyers side who actually communicates with everyone.

Feb 01, 2017 10:12 AM #4
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

The math exercise to cover the costs.. the fun part is when appraisal turn your head and cough shows more repairs and corrections than anyone planned for... everyone in the real estate triangle needs to be pulling together in the traces. Good blog post points Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents .

Feb 05, 2017 05:21 AM #5
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

We had one last year in our market where a buyer's agent wanted the seller's to write a check for the difference between actual closing costs and what was negotiated in the contract.  In our market, the negotiated amount or the actual amount, whichever is less is stated in the financing paragraph.

And it's been ages since we've seen any offer get more than 3% in closing help.  Occasionally ,we'll see a VA buyer get 4%, but that's rare.  All depends on market norms.

Feb 06, 2017 09:54 AM #6
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