Buying A Home
pinksparkle
member
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Closing Costs?
Can you guys fill me in on who typically pays closing costs? Does the seller or the buyer??
We recently put an offer on a home and in our area its typical for the seller to pay, but the seller actually came back and said that they wanted the buyer to pay for all closing costs.
Any insight would be appreciated.
Thanks!
Re: Closing Costs?
It depends on the sellers and buyers.
In my area, it isn't uncommon for sellers to pay some or all of the buyer's closing costs. But it's not expected. The buyers include what they want in their offer and the sellers can accept it or reject it. It's up to them.
I paid the closing costs on my first house. When I sold it, the buyers were responsible for their own costs. My second house, again I paid the closing costs. The house never sold, it went into foreclosure... yeah, it happens. When I bought my third house a few years ago, I finally caught a break and the sellers paid the closing costs. We're still living there, so I can't say what'll happen when we sell.
Now in your situation, the sellers said no. Now you can counter offer or walk away. You can't force someone to pay your closing costs just because it's the norm for your area.
There are a number of reasons why they don't want to pay your closing costs... maybe they need every penny to pay the mortgage and realtor fees, perhaps they're upside-down and already bringing money to the table just to be able to sell, they need all of the profit for their next home, or they just plain don't want to. If they're willing to lose a sale over it, then that's their choice.
http://pandce.proboards.com/index.cgi#general
Considering the recent RE market, sellers have been more often paying closing costs. We sold our house in Dec 2011 and paid 4% of closing costs for the buyers on a full price offer. This may vary depending on your region.
It can go either way. Sometimes seller will agree to pay all or part of closing costs, sometimes they won't pay any $$. Sometimes buyer does not ask for closing costs at all because they want their offer to appear stronger to the seller.
Did you ask the seller to pay for all or just a portion of the cc?
Did they come down on the price at all other than the closing costs? If so, there may be various reasons why they would rather have a lower sales price with you paying the closing costs rather than a higher sales price with giving you money back for closing. You can always counter with a higher sales price with money back for closing if that would work out better for your financial situation. If they didn't come down on the price plus refused to pay your closing, it sounds like you've hit their bottom line.
FWIW, the seller paid our closing costs, but we had to increase the sales price to get them to agree to it (i.e., instead of offering 200K, we had to offer 205K with 5K back for closing).
It totally depends.
On my first house, the seller paid 100% of the closing costs.
On my second house, we asked for the seller to pay 100% of the closing costs in our offer. Their counter offer was that they would pay half. We agreed. Of course, they screwed themselves by putting a specific dollar amount in the contract, not a percentage. Closing costs were estimated at around $12,000, but instead of saying they would pay 50% of closing costs, they said they would pay $6,000 toward closing costs. When closing costs ended up to be only $8,500, the sellers still had to pay the $6,000 they agreed on. In the end, they paid $6,000 and we paid $2,500.
Mr. Sammy Dog
It depends on your real estate market. In "tough" markets it's fairly common to ask for the seller to pay a certain amount or percent of the purchase price towards closing costs. If it's a competitive market or there are multiple offers, then the seller has the choice.
Note that your bank determines what a seller can pay towards closing based on the type of loan and the amount you're putting down. FHA loans allow sellers to pay up to 6% of the sales price in closing costs, but that amount cannot exceed actual closing costs. We're doing 5% conventional and we're only allowed 3% back in closing costs.
In your case it's possible that the seller is underwater on the mortgage and won't have cash leftover to cover closing. Check Zillow to see what the last sale price was. Also keep in mind that the seller has their own costs (5 or 6% in real estate commissions) to worry about in addition. Also, if it's a short sale the seller is not allowed to pay closing costs since they walk away with nothing.
One of my biggets pet peeves. You can't tell how much someone's mortgage is currently by the last sales price. A TON of people refinanced and cashed out equity during the boom. Now that person would be underwater and it's unrelated to the sales price.
I do agree that if they said they can not pay the closing costs then you either need to up your purchase price to include those (if it appraises ok for that) or pay for them out of your pocket or walk. Some people do not have the means to pay for them. It is typical in my area for sellers to pay a portion of them but I assume that's not the case in every sale.