Buying A Home
MrsRossIsMe
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Sellers Pay Closing Cost?
Can someone please explain this to me like I'm a 2nd grader? I'm trying to make sense of it on websites, but I still can't grasp it.
Thank you!
Re: Sellers Pay Closing Cost?
Both the buyer and seller go to closing. It may or may not be at the same time. There are certain taxes and fees that each party is responsible for paying at closing. I'm too lazy to look them up but I'm sure someone else could give a more detailed answer.
Basically, the buyer will ask the seller to pay the closing costs that the buyer would typically have to pay, in addition to their own costs.
When we sold, we gave our buyers 2000 to use toward closing. They still had to bring a check because it wasn't enough to cover all the costs.
When we bought, we asked our sellers to pay 100% of our closing costs. We didn't bring a single cent to closing.
It's not a given. You can ask, the sellers can say "no". In a buyers market, though, people feel that you can ask this and basically expect the sellers to agree.
But... it's not a given. Closing costs are expensive!
~Benjamin Franklin
DS dx with celiac disease 5/28/10
Hello,
It is true that the buyer can ask the seller for a concession up to 6% of the total sales price to help them close on a home. There is no guarantee that the seller will pay it but if they are pressed to sell, they may consider the entire 6% or negotiate the amount. The closing fees range from the fee you may have to pay for your realtors services, the flat fee a broker charges to every client (in MD), state & county taxes, prorated utilities, etc. These fees will show up on your hud1 and once you write an offer, it's best to ask your realtor for a mock hud1 prior to submitting so you can ask for the exact amount that is needed. It's usually not wise to low ball the offer and then ask for closing help!
Something that many first time buyers don't realize is that you will most likely have some "prepaids" that will be due at the time of closing. These include HO insurance (depending on your company, they could require a full year's payment up front), HOA dues (again, they can require a full year), taxes (depending on your county/city, etc.) and there might be more that I am not thinking of at this hour
What is going to happen when you ask a seller to pay closing (if they agree) is for them to come back with a specific dollar amount that can be used towards the closing costs. With all the costs associated, you will still probably need to bring money to closing.
My Valentine Bookends (2~13~13, 2~15~09)
This is how it works in closings in my state, things may vary in yours:
Buyer is responsible for certain expenses (i.e. inspections, pre-pay of their homeowner's insurance, title insurance, expenses related to their loan).
Seller is responsible for certain other expenses (taxes that accrued for the year while they were in the house, overnighting their payoff to their mortgage company, real estate agent commission).
The buyer and seller can agree to change the way that the fees are traditionally apportioned.
Buyer tells Seller, "I will buy your house for 150k but I want 1k in closing costs."
Seller says sure.
At closing, you get a balance sheet that is called a HUD. All the numbers related to closing are on it. If anyone is getting paid, it's detailed on this sheet.
Think of this imaginary table as the starting point:
Buyer pays Seller pays
Inspector: $500
HO Insurance $300
Title Insurance $200
Misc Fee $300
Taxes $500
Overnight fee for loan payoff $30
Total:
Buyer: $1300 Seller: $530
Now let's say the buyer gets $1000 in closing costs paid, the balance sheet now looks like this:
Buyer pays Seller pays
Inspector: $500
HO Insurance $300
Title Insurance $200
Misc Fee $300
Taxes $500
Overnight fee for loan payoff $30
Total:
Buyer: $300 Seller: $1530
It's really just moving numbers around and financing closing costs into a loan. There can be problems if the house doesn't appraise. Say for instance the house is worth 150k. Buyer says I'll pay 175k but I want 25k in closing costs. Seller still gets 150k for it after paying costs so they say sure. Buyer wants a loan based on the house being worth 175k, banks says screw that, the house is only worth 150k and you're playing with the numbers.
We've had closing costs paid on both our houses. On the current house, we gave 3k in earnest money and ended up getting money at closing b/c between our earnest money and the costs paid, we got a refund.