Home Buying in 38125>Question Details

Mrswilliamsn…, Home Buyer in Memphis, TN

Are you given a definite percentage rate for closing costs before the closing?? We requested 6% to the seller, and

Asked by Mrswilliamsnewhome, Memphis, TN Fri May 7, 2010

was stated to accept 4% in contract. Our agent did not ask for what we wanted, so we want to go back and ask for 6% but it was told to us that the price of the home will increase. But what are the negative effects that would happen if we decide to go back and ask for 6% other than the asking price increasing??

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3
Jo Shaner’s answer
You have to understand that just because you want it, doesn't mean the seller can deliver it. 6% is the maximum that the seller can pay for the buyer under a FHA loan right now. This is going to change very soon and the seller may only pay up to 3%.

Now, it looks as if you are purchasing in the Memphis city limits and depending on when you are scheduled to close (May or June), you will not need the whole 6% unless you are borderline in credit (you mortgage insurance premium and home owner's insurance are effected by that) because of the time of year when taxes are escrowed (call the low months). County and City taxes are collected at 2 different times. Also, you may want to compare closing attorney/title companies fees. Just because you are asking someone else to pay your fees doesn't mean you don't have a responsibility in overseeing over-spending. That is just a decent thing to do.

Third and lastly - if you were under contract before April 30th for the tax credit, you'd had better check with an attorney before cracking open the contract or rewriting a new one if you are wanting to keep your tax credit. The IRS is very watchful of these things and you may gain $2000 or $3000 to lose $8000. In the South, we call that cutting off your nose to spite your face!
0 votes Thank Flag Link Mon May 10, 2010
Mrs. Williamson,

The only negative effect that might occur was mentioned below - will the home
appraise for the higher price? .... probably .... A slightly higher price will mean
a slightly higher mortgage payment from you for the life of the loan.

If you accepted the sellers' counter offer to pay 4% of your closing costs, which seems to be the case, the
seller is under no obligation to give you 6% and you must close on the original deal or walk away, risking
your earnest money and perhaps putting yourself in harm's way legally speaking.

My advice: Ask your agent to talk to the sellers' agent and see if they can give up more - do you really need
to open that can of worms? The seller will refuse to give more unless he raises the sales price. After all,
you already asked for 6% and he countered at 4%. The terms of the contract can probably be dealt with on
an Amendment to the Purchase Agreement - without drawing up a whole new contract. Ask your agent.

Good Luck,

Marita
Assoc Broker
Prudential Indiana Realty Group
Indianapolis area
0 votes Thank Flag Link Sat May 8, 2010
I am going to assume that you this 4% is from the seller (seller's concession) and from what I am gathering, both parties (you as the buyer and the sellers) have agreed upon the 4%. Now you are thinking you would like to have them pay 6% instead? There are a couple of points here regarding this. 1. If both parties have agreed to the 4%, you may ask for additional closing costs to be paid, but the other party is more than likely under no obligation to agree (since there is the 4% that is already agreed upon.) 2. If you were to receive 6% instead of the 4%, then certainly the seller could offset his/her loss by increasing the price of the home. Sometimes that is what needs to happen in order to sell the home.

I would certainly consult with your agent to see if it is even possible to negotiate that increase. Once you are past a certain period within the contract, you are typically bound to what you have agreed to up until that point. There is never any hurt in asking, but you may not be able to even negotiate that at this point in your contract. Again, speak with your agent and see what your agent suggests.
Web Reference: http://www.JasonPeebles.com
0 votes Thank Flag Link Fri May 7, 2010
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