Home Buying in 08033>Question Details

Holmes, Home Buyer in Haddonfield, NJ

In todays real estate climate, will most sellers pay closing costs and if so much is the average? Thank you.

Asked by Holmes, Haddonfield, NJ Fri Feb 28, 2014

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In today's real estate climate in Metro West Boston a buyer asking for the seller to contribute towards closing costs when making an offer is a red flag to sellers who are looking for and can find with relative ease a well qualified buyer who can make it from offer, through appraisal and lending underwriting, and to the closing table. However, if you find issues during a home inspection you may negotiate with a seller to contribute money towards costs in lieu of requested repairs. It's a risk to plan to go that route at the get go: if cash is tight remember you have to pay for an inspection, deal with the uncertainty of what an inspection will uncover, and whether a seller is willing to negotiate after inspection. If the sellers have the leverage in your market you could be wasting time and money making an offer on a house if you don't have the money to pay for closing costs. Best advice I have rto offer is to shop around for a good lender who can go over what your loan options are given your personal financial situation before you start looking for a house. You may find a loan where your closing costs are mostly absorbed into your loan. Good luck!
4 votes Thank Flag Link Sun Mar 9, 2014
Nice ,best adviced
Flag Fri Apr 4, 2014
How can asking for closing costs be interpreted by the selling side?
1. Buyer is shopping above their price point..
2. Buyer is tapped out and negotiation can only go in one direction DOWN!
3. Buyer has very little money saved and may be marginally qualified for a mortgage.
4. A marginally qualified buyer is more likely to get denied a loan a week before closing.
5. The seller is likely to suffer the consequences related to the lender the buyer choose:
- Inspection (disclosure)
- Appraisal (durability based on type of financing)
- Appraisal, price beat down if big bank is involved AFTER making closing cost concession.
6. Buyer is being 'played' by their bank/lender to make the banks fees appear less or justified. This if often cloaked in the words 'lender requires' .... A seller should CHOOSE not to become a victim because the buyer choose the wrong lender.

There are more, but you get the point.
Such offers are viewed as less competitive for many reasons. The best option for a buyer is make a 'clean' purchase offer. Demonstrating the characteristics of a WEAK buyer will not prove beneficial in a sellers market.

Eric Axelson suggested a great alternative that reduces, not eliminate, the concerns a seller would have.
4 votes Thank Flag Link Sun Mar 9, 2014
Luddi, you identify yourself as a buyer. You should be aware price, or as you say FINAL COST, is only ONE element a seller will consider. There are many instances where the highest offered price is rejected. I know you will find that hard to believe BECAUSE you are unaware of the OTHER highly important factor. It is this 'other' element that a conses ion produces the red flags.

Have a chat with your REALTOR to understand these issues.
Flag Mon Mar 10, 2014
Sorry Luddi, it makes absolute sense. In a the current market the buyer does not decide the price, especially a buyer with no money to put do on a house looking for people to pay their clisoing costs. But then agian, this is a NYC suburb... so who knows .. maybe sellers are "giving the farm" to just any buyer that walks into a home in NC. but the closig costs thing is just not happening.
Flag Sun Mar 9, 2014
This makes little sense as the Final Cost is just as important to the Buyer as to the Seller and is a negotating tool to notify the Seller that their price is too high. As the Romans said: "THE BUYER DECIDES THE PRICE." If the Seller will not compromse and be reasonable then no matter what price the Seller puts on his home without a willng Buyer it is down to zero..no sale.
Flag Sun Mar 9, 2014
Sorry...

There just is no "most", nor is there an "average" when they agree. Each property purchase, these days, is a unique transaction, and should be treated as such.
4 votes Thank Flag Link Fri Feb 28, 2014
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
There is no formula for who pays closing costs. A buyer should remember they are always paying closing costs because if a seller accepts an offer which includes them paying a buyer's closing cost they are going to add that into their bottom line and in most cases it is figured into the price they accept on their home. Ex: a buyer offers $250,000 and asks the seller to pay $6,000 in buyer closing costs. If the seller accepts that offer does it mean they would have accepted $244,000 with no closing costs? They Probably would have. The question you as a buyer must answer is do you want to pay back that $6,000 over 30 years by paying a little more for the house or save up the money to pay your own closing costs. Most buyers are asking for it because they need all their cash to put into the home. There is no wrong answer but i feel you as a buyer are paying it one way or the other.
3 votes Thank Flag Link Sun Mar 9, 2014
Today’s real estate "climate" is pretty good. That being said it is far and few between listings that the seller is willing to pay any closing costs. It is just not happening too much at all.

Unless of course the house is in bad shape or cannot sell for some reason.. sure there may be some incentive by sellers.

But in reality. Nah.. not happening too much.

John Sacktig
Broker/Manager
Orange Key Realty
Office: 732-863-6969
JSacktig@prnagekeyrealty.com
2 votes Thank Flag Link Fri Feb 28, 2014
There is no set amount that the Seller may consider, however, some programs will only allow 3% of the loan but FHA will allow up to 6%. So the answer is somewhere between 0-6%. If you are not coming in close to a full price offer you may not receive any Seller contribution.

Go with an experienced agent. I have 22 years of experience and I am well versed in finance and am considered an expert in negotiating such a contract.
1 vote Thank Flag Link Sun Mar 9, 2014
Me, too! Quite honestly I do not consider myself a contract negotiator. Legally the negotiation is between buyer and seller. I will always give my seller/client or buyer/ client the best advice I can. Sometimes you have to advise your client to not do something he is inclined to do.........even if it costs you your commission. I am in year 25.
Flag Sun Mar 9, 2014
The above applies to Maryland.
Flag Sun Mar 9, 2014
There is no such thing as an average; and who pays what costs varies form state to state. In Texas there are customs that are observed but they are not law, so the buyer and seller can negotiate virtually whatever they wish. In Texas the seller typically pays the commission, title policy, deed prep, half the closing fee, tax certificates, cost to record the release of lien, if there is one, and pro-rated taxes through the date of closing. If it is a residence buyer typically pays prep of loan docs, appraisal, inspections, survey, half the closing fee, origination fees, all the stupid fees charged by secondary market lenders and the mortgagee's policy. In the case of land purchases the survey tends to be negotiated more often depending on why the survey has to be done. Some federal loan programs do require the seller to pay certain expenses. In those cases where the seller makes loan concessions or is required to pay expenses, the seller often jacks up the price to cover the expense.
1 vote Thank Flag Link Sun Mar 9, 2014
The Federal loan programs its low inter....?The best adviced for clients ,who can makes a loan from Fedaral program ?
What is means frist time buyer specialists ,please.
Flag Fri Apr 4, 2014
Excellent answer, Mr. Mcewen! Covers all the important and customary expenses in closing a residential sale. Just saw you were mislabeled as a homebuyer, a real estate broker makes more sense.
Flag Thu Mar 13, 2014
I am not a homebuyer. I am a real estate broker.
Flag Sun Mar 9, 2014
One way or another, the buyers pay the closing costs. I have never seen a seller bring a check to the closing table.
1 vote Thank Flag Link Sun Mar 9, 2014
Unfortunately, in two separate real estate transactions in two different states, I HAVE had to bring a check to closing. In both instances, the market leaned heavily toward the buyers (too much inventory) and I was on a deadline and had to sell. So I think that at least part of the answer to this person is become educated about the market in your area. And as a buyer, particularly a first-time buyer as this person seems to be, should ALWAYS be represented by a knowledgeable Buyer's Agent.
Flag Mon Mar 10, 2014
You are the only one responding from NY. I really like to hear more of what is going on in NY... thanks for your input.
Flag Sun Mar 9, 2014
Closing costs are mostly a negotiating tool only. Closing costs are not typically given unless asked for. And then how much is the seller willing or able to contribute.

Your loan type will also be a factor in how much is allowed. For instance FHA as opposed to conventional type loans differ in what you can get back as closing costs from the seller. up to 3% and up to 6% ...

And then they cannot exceed the actual closing costs... if your closing costs are 5000 and seller allowed 6500 in closing costs... you would only get the 5000 the difference is given back to the seller...

The closings costs are not for everything either.... There are guidelines that dictate what are allowable closing costs.

When negotiating your purchase or even as a seller, this is where experience and knowledge of your real estate professional can help you get the most money and best price for the home.

If you have specific questions, you can contact me directly anytime 7 days

Search Short Sales and foreclosure Deals at http://www.BuyNjShortSales.com

Larry Sarlo
RE/MAX Preferred
609-868-1171
lsarlo@comcast.net
http://www.larrysarlo.com
1 vote Thank Flag Link Sat Mar 1, 2014
Depends on the market! The median home price in Haddonfield, NJ is $549,000 and most buyers in that price range do not require seller assist in order to close. I see the request for +/- 3% typically on homes priced from $250,000 and under. It's important to keep in mind that you may have to add to the current list price for the seller to agree. Again, it really depends on the market you're looking in!

Kathi Boggs-Shaner
Berkshire Hathaway HomeServices, Fox & Roach
856-979-3157
1 vote Thank Flag Link Fri Feb 28, 2014
I'm in California where the market is "hot" as a pistol in many areas. It is very strongly a Sellers' Market now. No! They are getting all cash and over asking price offers and are not paying for much.
1 vote Thank Flag Link Fri Feb 28, 2014
In my area, Indiana, it is pretty common for the seller to assist with pre-paids and closing costs for the buyer. On my contracts its usually worded, " seller to pay up to $2,500 in buyer's pre-paids and closing costs". You can figure it into your offer you present to the seller.
0 votes Thank Flag Link Thu Mar 13, 2014
Hello -
As a Realtor, I find that its pretty much left up to the Sellers and How fast they want to move their property; although, ITS A SELLERS' MARKET NOW, BUT ITS GOING TO TIGHTEN UP FOR BUYERS PRETTY SOON....SO IF YOU'RE SITTING ON THE FENCE, YOU'D BETTER PURCHASE NOW BECAUSE..."TIME IS OF THE ESSENCE"!!
0 votes Thank Flag Link Wed Mar 12, 2014
Every local market is different, but the Charlotte (NC) real estate climate is swaying toward lower Seller contributions toward Buyer's closing expenses. As of this month, if no other homes came on the market and we only sold what was currently listed our inventory would be depleted in around 5 months. This means Buyers are having a hard time finding move-in ready listings and the things that look good go fast. All of this means that Sellers don't have to pay as much for closing costs because Buyers have to make their offers as clean as possible in order to get into their next home.
0 votes Thank Flag Link Mon Mar 10, 2014
If your offer is high enough the seller will pay some of the closing cost and buy you lunch too.
0 votes Thank Flag Link Sun Mar 9, 2014
I love your answer. It gives me great hope and it made me laugh.
Flag Wed Mar 12, 2014
approximate 4 percent of value of House
0 votes Thank Flag Link Sun Mar 9, 2014
There is not an average, as the seller credit cannot exceed the closing costs and prepaid interest /escrow costs of the loan, therefore each transaction would be unique. It would behoove the buyer to be prequalified/preapproved by a lender to understand what their particular closing cost/escrow scenario would look like. Once that information is in hand then make your decision as to your negotiation with the seller and whether it will include a seller credit
0 votes Thank Flag Link Sun Mar 9, 2014
In todays market, sellers WILL contribute to closing costs. The average in our area (Georgia) is around 3%. It is always best to fill in the closing costs "blank" on the contract with a percent instead of a hard and fast number. The reason is that while you're negotiating on the price, the percentage of seller contribution will fluctuate. If you put a set amount for closing costs, and the seller agrees, then you are stuck with that amount and it will not increase or decrease based on what the purchase price is.
0 votes Thank Flag Link Sun Mar 9, 2014
It seems to differ with location and price of home. In our area a first time home, $100-200k seller usually contributes $2-4k in closing costs to include a one year home warranty.
0 votes Thank Flag Link Sun Mar 9, 2014
$5000 is what i was told from a realitor and from my experince
0 votes Thank Flag Link Sun Mar 9, 2014
Although the market is showing more inventory since last year, it's still somewhat competitive with buyers taking advantage of historically low interest rates on loans. Some areas are more desirable (Location, location, location), and depending on the house and the list price, multiple offers can still happen. Having said that, I have seen sellers being open to paying some closing costs, and some paying the maximum allowed for that particular loan. If you need some closing costs paid to make the offer, by all means ask. Your lender and your Realtor will be able to help you decide what, if any of those closing costs you need to get an accepted offer, before you go shopping in a particular price range. Choosing a Realtor to represent you, and NEGOCIATE for you is key. Good luck with the great journey you are about to embark on! Feel free to ask me more.

Jacqueline Donohue
Coldwell Banker Residential Brokerage
32675 Temecula Parkway Suite A
Temecula, Ca 92591
951 878-9007 Cell
661.449.3399 efax
info@jacquelinedonohue.com
http://www.camoves.com/jacqueline.donohue
CalBRE # 01308721
0 votes Thank Flag Link Sun Mar 9, 2014
All real estate is local. Thus, there are no hard and fast answers as to seller's concessions regarding closing costs.
That being said you should have strong trust in your REALTOR who not only will guide you and strongly negotiate on this matter but also on the other matters that are part of a real estate transaction.

JOAN LORBERBAUM MOORE
Broker Associate, GRI
Lang Realty
9858 Clint Moore Road
Boca Raton, FL. 33496
561-573-3238
JoanMoorerRealtor@gmail.com
http://Www.boca-delray-boynton.com
0 votes Thank Flag Link Sun Mar 9, 2014
In my area (Cape Coral, FL) in our current market sellers typically are not willing to pay any of the buyers closing cost. Back when it was a common practice here sellers usually wouldn't agree to anymore than 3%.
0 votes Thank Flag Link Sun Mar 9, 2014
Terry - are the conditions you see in Cape Coral because Sellers know that there are enough Buyers who are well off enough to bear their own closing costs? Here in the DC Metro are, it is all over the place. But generally, the more active the market, the smaller the closing cost assistance has been. In NW DC and Montgomery County, subsidies are fewer and lower. different in Price Georges County and Eastern portion of DC.
Flag Sun Mar 9, 2014
Here in Georgia we do ask for closing costs. However, since the market has been and is still shifting from a buyer's market to a seller's market this request is becoming more difficult to negotiate . You can ask for 3% to 6% depending on the loan type and the seller's willingness to negotiate.

Thanks,
0 votes Thank Flag Link Sun Mar 9, 2014
Seller are always willing to pay closing costs. As long as the bottom line nets what they want. So once you have an agreed purchase price you can then add in the closings costs and up the purchase price.
In essence buyers are really borrowing the closing costs.
50% of the deals I do include seller concessions
0 votes Thank Flag Link Sat Mar 1, 2014
Hi, Many buyers do take advantage of asking the seller for closing costs. There are set guidelines to keep in mind.
If you are getting a conventional loan and putting down less than 10%, you can get back 3% of the sales price for closing costs. With more than a 10% down payment you can get back up to 6%. FHA loans are always 6%.
On both programs the max closing costs cannot exceed the actual closing costs. This means if your closing costs are $5000 then you cannot ask above this number.
If you are having the seller pay your closing costs then presumably the seller is taking a bit higher price than they would if they did not pay the closing costs. So you as the buyer are paying a bit more for the house than if you paid your own closing costs.
With the low cost of borrowing it makes sense for a lot of people to do this.

Contact me to talk more about the different packages you may be eligible and for some lender contacts.
0 votes Thank Flag Link Sat Mar 1, 2014
In today's market, despite how often this is requested and agreed upon on HGTV programming, here in NJ a seller paying closing costs it doesn't happen that frequently, mostly because it nets the seller less profit from their sale in the end. Additionally, in the case of multiple offers, rest assured an offer WITHOUT a concession request like this would given more consideration than offers which include one! It's always preferable to make a reasonable offer to start, allowing for a bit of wiggle room to negotiate should a seller comeback with a counter offer. It's smarter to siimply factor in closing costs when house hunting and keep that percentage in mind as an added expense to bring to the table at closing. Hope this helps...
0 votes Thank Flag Link Fri Feb 28, 2014
i agree with you john sacktig, as a first time home buyer i want someone i can trust and be honest with me and get my family the best house with the best price possible. no lying or tricking me into giving more money way to a house im going to have to fix up anyways... if i get an honest person im more likely to spread the word and get other people to use the person i got to help me because of how i got cared for. most likely others will do the same also..., kindness and honesty goes a long way....
Flag Sat Mar 8, 2014
Sandra, thank you. I am amazed at how many other Realtors would rather just send up a smoke screen to blind a buyer just to get a client.
Flag Sat Mar 1, 2014
Average closing costs are around 5-7% of the sale price.
Flag Fri Feb 28, 2014
It depends on how anxious the seller is, how long the property has been on the market and several other factors. If the property has been on the market several months the seller is certainly more likely to negotiate. The average that a seller will contribute, in my recent experience, on closing costs at this time is between $1000.00 and $1500.00.
Please call me if you need any further information.
Thank you,
Jim
0 votes Thank Flag Link Fri Feb 28, 2014
Hi, with a realistic offer, sellers may consider, yes. There is no average per se, but various mortgage programs allow a max of 3 or 6%. You can always request to build on top of offered amount.

For example, you and seller agree to a price of $300,000. You would like to "finance" closing costs of 3%. You would document sales price at $309,000. The seller net does not change.

I hope this helps!

R. Eric Axelson, Associate Broker
Licensed in NJ and PA

Kurfiss Sotheby's International Realty
856.617.1212
axelson@kurfiss.com
Web Reference: http://kurfiss.com
0 votes Thank Flag Link Fri Feb 28, 2014
Well, that is great. but the question was about the "seller" paying the closing costs, not a seller concession as you describe.. totally different situation as the seller is not paying anything,.. the buyer is rolling the financing into their mortgage. Sellers concession's happen all the time...
Flag Fri Feb 28, 2014
There is no average amount and a lot has to do with your offer. If you low ball a seller on the price of the home.... There's not much of a chance of getting closing costs. But if you give the seller a fair price on their home you have a much better chance of getting them to kick in some closing costs.
0 votes Thank Flag Link Fri Feb 28, 2014
Everything is negotiable. Depending on what the seller has as a bottom line will often determine if they will be willing to pay closing costs. Sometimes the motivation to make or break a deal will make them want to agree to pay closing costs as well.
0 votes Thank Flag Link Fri Feb 28, 2014
I am in northwest indiana and it is not uncommon to pay buyers closing costs or a portion of it. Of course, everything comes down to price. So if you are going to ask for closing costs, be prepared to not have as much negotiating power. Typically, we see 3000-4000 for closing costs
0 votes Thank Flag Link Fri Feb 28, 2014
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