Thaddeus Hac…, Home Seller in 11101

Negotiated a good price on a new development condo, but then saw the closing costs. Too late to negotiate?

Asked by Thaddeus Hackworth, 11101 Tue Sep 1, 2009

We negotiated a good price on the unit, but I was surprised by all of the closing costs that are pushed to the purchaser in a new development. Our lawyer is getting the purchase agreement tomorrow; is it too late to ask the seller for a concession on closing costs?

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3
Robin Silverberg’s answer
Allen, theoretically, a loan officer should know that new construction closing costs have additional fees other than the standard ones, and should prepare a good faith estimate in advance with those fees on it. However, seeing as the contract has not been signed yet, Hack may not have applied for a mortgage yet. In addition, many banks and loan officers do not provide an upfront GFE. There is nothing wrong with that, the law only requires them to provide a GFE within 3 days of taking a mortgage application. Many GFE's, especially when applying to a bank directly, are prepared by a loan opener who would only provide the standard fees and would not include those that apply only to new construction.
1 vote Thank Flag Link Wed Sep 2, 2009
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When you negotiated the price on the unit, did they disclose to you anything about closing costs? If you were given a copy of their offering plan to look through, which would contain this information, then I would say that you most likely will not be able to negotiate. The offering plan is generally in the form of a soft cover book, and is rather lengthy, so you may not have even read it if you were given it for review. If, however, the selling agent did not give that document to you, and did not disclose to you the costs that you would have to bear, I would say that in this market, you could still negotiate. I don't think that a selling agent should expect you to know that a buyer is typically required to pay the NY State and City tranfer taxes for the seller on new construction, plus additional costs for attorney fees, sewer hook-ups, you name it, it could be in that document.
Keep in mind, you have not signed a contract yet, so anything can be worked out.
1 vote Thank Flag Link Tue Sep 1, 2009
If you haven't signed the contract you still have options. New construction generally contains higher closing costs since some of the fees and taxes are transferred to the buyer. If you used an agent he should have mentioned that, but of coarse you had the ultimate responsibility of reviewing the offering statement prior to making your final offer. Keep in mind that the market is still in your favor. The developer is very anxious to sell the units as quickly as possible. That's why you were able to negotiate a good deal as you said. Speak with your attorney and explain your concerns. He should be able to help you develop a strategy to approach the developer and open negotiations again.
This could have been avoided if you had been pre-approved for your mortgage. It sounds as if you did not do that. Pre-approval for your mortgage would have provided you with a good faith estimate of all costs.
A seller concession is still possible. You should also understand that the amount of the seller concession is added to the best price you can get and credited back to you at closing. This allows you to amortize the closing costs with a modest increase in your monthly payment. You should be able to accomplish your goal if you really want the condo and qualify for the mortgage. But don't be afraid to ask questions of you attorney, your agent and your lender...........Good luck, I'm sure you'll do well.

Allen Bauman
Century21 Yve Real Estate
Licensed Real Estate Agent
NYS Certified Residential Appraiser
516-791-3846
1 vote Thank Flag Link Tue Sep 1, 2009
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