Home Buying in Slidell>Question Details

Terri Bell, Home Buyer in Slidell, LA

Realtors tell me its buyers mark but sellers don't want to pay closing cost. Why is that?

Asked by Terri Bell, Slidell, LA Thu Feb 3, 2011

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Terri,

This is a buyers market in pricing, but why do you think that the sellers should have to pay YOUR closing costs? You want the house cheap, which is what happens in a buyers market, then you say.. nah.. not cheap enough.. if you really want me to buy your house.. YOU pay for MY closing costs too, I don't want to pay anything.

How does that sound? I tell my listings to NOT offer to pay anything. Ever.
if a buyer asks for closing costs.. then we respond back, sure if you pay full price.

Best of luck.
3 votes Thank Flag Link Thu Feb 3, 2011
In the Charlotte, NC market, it is not unusual for buyers to ask for part or all of closing costs. It is a buyer's market in that there is a 9 month or more supply of homes on the market. However, if you understand supply and demand, you have to see that there is a lot of supply and very little demand in the sense that it is getting increasingly more difficult to get a loan. Also, lack of demand, drives housing prices down along with the fact that there are a lot of sellers facing short sale and/or foreclosure. Most of the sellers in this market are struggling to sell their homes without having to pay more money at closing/escrow. We experienced such an inflated market through 2007 that sellers who bought back in the good old days are now "underwater" in their mortgages.

If you are workiing with an agent who is representing your best interests, they will do what you ask them to do as long as it is ethical and doesn't compromise their license. Why not ask? I don't know your situation as a buyer, but a lot of buyers are struggling just to make a down payment much less the closing costs. Ask for part of the closing costs. I can't imagine that a seller wouldn't do whatever they can possibly do to get their home sold. Evidently, Slidell, LA, doesn't have over 17,000 active listings in their MLS like we do.

Hope this helps.
1 vote Thank Flag Link Fri Feb 18, 2011
It really makes no difference if the seller pays closing costs or not. An offer of $200k + seller pays $5000 in CC is the same as $195k and no closing costs. Just add the CC amount to the offered price and I bet they will pay it. They get more tax deductions too. You are likely asking for both a lower price and CC making the offered price too low for the seller.
1 vote Thank Flag Link Thu Feb 3, 2011
This question is from February 2011. I suspect things have changed a little since then and this buyer has long settled on her property.
0 votes Thank Flag Link Fri Jun 7, 2013
The best deal is one that is a win-win for both parties.
If you are offering a rock bottom price and then asking for closing costs too, you might be digging way too deep into the sellers pocket.
On the other hand, when you offer what is a reasonable price, you are more likely to get some of your costs covered by the seller. Just remember, being a buyers market doesn't mean sellers are willing to give their homes away.
0 votes Thank Flag Link Fri Jun 7, 2013
Time to change the Realtors you are talking to...depending on where you are it is not necessarily a buyers market.
0 votes Thank Flag Link Fri Jun 7, 2013
Dear Terri -
I am a full time agent here in Slidell. Quite often I am ablel to get seller assistance with closing costs... it's all in how we negotiate the terms. If you aren't already working with an agent, give me a call. I am sure I can help you too.
Joyce Albert, ABR
504*-451-8343
0 votes Thank Flag Link Mon Jan 23, 2012
Hi, Terri.

It's a buyer's market because the pricing is so favorable and there are many homes available. Prices have gone down so much in areas that those who have thier home on the market have lowered all they can before going upside down on their mortage. It's hard to compete in today's market and seller's are at their last leg.
If you are looking for closting costs, purchase from a builder or talk to your lender about any assistance programs available in the area of preference.

I hope this helps.
Web Reference: http://www.har.com/sboon
0 votes Thank Flag Link Mon Feb 28, 2011
Ultimately it all comes down to negotiations. There may be sellers who @ the price you have offered cannot pay closings costs because they do not have enough equity and to pay your closing costs would make it a short sale which would need bank approval and months of waiting for bank approval. It may be that the home you are looking at is already priced well under market even for today's market and so you paying closing would be fair.

You have 2 options if you want to buy THIS house and have closing costs pay. Counter offer asking again for closing costs ( maybe slightly less) or add the closing costs on TOP of you purchase price. ( or maybe go halfs on it with them in your new offer) Your other option is find another house you like and start the offer process over. It is possible to get a seller to pay closing costs in ANY market, have done it is a sellers market many times, in the end it is all negotiable and it is the seller's choice.
0 votes Thank Flag Link Thu Feb 24, 2011
if the seller doesnt want to pay some or all of your closing cost, then buy another home
0 votes Thank Flag Link Wed Feb 23, 2011
"Buyer's Market" means more competition between home sellers.
"Seller's Market" means more competition between home buyers.
"Buyer's Market" doesn't necessarily mean they will rush to accept just any offer and bend over backward to make things happen. If they can hang onto their house eventually the market swingsto the "Seller's Market" and an offer they like will present itself. It's all about competition between other homes yours compares to.
If you like the house ask as close as you can to their asking price and ask for help up to X amount for closing costs. For example, ask for $4000 in closing costs. If they can negotiate the asking price up $4000 from what you offered most times they will help out with the closing costs.
0 votes Thank Flag Link Fri Feb 18, 2011
Hi Terri - Closing costs are but one aspect of a transaction - the bulk of the savings of the "buyers market" is on the pricing side. If you can negotiate the inclusion of closing costs or a portion of them, then great, consider it additional icing on an already delicious cake. Market dynamics are local - and you've gotten great glimpses of that in the responses here.

My recommendation is this - with the assistance of your agent, take a step back and look at the entire negotiation - I like to remind my sellers and buyers that a successful negotiation is one in which both parties feel equally disappointed - nobody clobbering the other, everyone giving some....those are the deals that I see make it to the closing table.

Now if you must have the seller cover all or a portion of your closing costs to qualify for your loan, then that is a different scenario. If that is the case, then you need to find the sellers that will do that.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Fri Feb 18, 2011
Indeed Terri, the seller closing cost is just one aspect of negotiating of the deal. -

Sometimes i'll put a cap on the closing cost - i.e. Seller will pay up to $500 of Buyer's closing cost.... it doesn't have to be the whole cost.

Then the Buyer feels like they got something out of the deal,& the Seller just gave up a little to make the purchase happen. Happy Days for both.

The key is pricing the Seller's home to allow for that, if it's going to be an option.

Jimmy
0 votes Thank Flag Link Thu Feb 17, 2011
Sellers are already taking such a hit with their sales prices that they often can't afford to pay buyers closing costs as well. Unless, as some other haves mentioned, you are willing to offer a higher price in order for the seller to pay your closing costs and still walk away with what they need.
If you must have your closing costs covered, and can't go high enough on your offer to allow the seller to compensate, then you are likely trying to buy a home you can't afford.
In my area prices are very low allowing buyers to purchase homes that they previously could not afford. So the prices are favorable to buyers, but that doesn't mean that the sellers are willing to pay for everything plus take a huge hit on the value of their home. Most sellers are in a bad spot, but that doesn't make all of them so desperate to sell that they are willing to be the one who just keeps giving & giving.
0 votes Thank Flag Link Thu Feb 17, 2011
The "buyer's market", is usually reflected in the price the seller is willing to take. In Hawaii, the sales price is ultimately the "market value" of the property, which is based on recent like solds. This is the amount the bank is willing to lend on. In Hawaii, no one is paying, or should pay over the market value for a house. Some types of loans won't allow the buyer to pay certain costs and the loan will allow a higher amount to cover fees, sometimes the price offered is enough that the seller is willing to pay some towards the closing costs, and sometimes the seller is at the lowest price they can manage. It's all about the bottom line and what the banks will agree to.
0 votes Thank Flag Link Thu Feb 17, 2011
The real estate market is small areas with in a large market. When we say it is generally a buyers market you cannot across the board say every house will sell at a low price. Sellers price their homes to what they think the market will bear but the buyer in the end sets the price if the seller will agree to it. The longer the house is on the market they will be the ones to reduce it over time and take less as they follow the market down. When the buyer comes in with what might be considered a low offer and then asks for closing costs it is just another price reduction and that might be making the offer to low for the seller since they might not have at that point enough equity to sell. Make your offer the best offer with closing costs if you need them and look at the net to the seller and see if you are in the ball park of what other homes have sold for. As you wait for the values to drop the 1% interest rate increase in the past 5 months has cost you $100 a month in higher payments or 10% on a $200,000 purchase price so is it worth it to wait and try and get another $3,000-$6000 as you watch your payments go up? I think now is the time to step up get educated on values and make your best offer since these rates are going to be going up more. Good Luck to you.

Tom Inglesby, Broker
RE/MAX Equity Group
503-319035
0 votes Thank Flag Link Thu Feb 17, 2011
If it is a short sale the seller already lost all his down payment and all his home improvement cost & or any investment in the property. He/she can not afford to stay in the home either, that is why he or she is selling home for a short sale. In most short sale, you can ask the bank to pay for it and some bank will pay the closing cost in the short sale situation. I had a buyer offered $210,000 for a short sale home that the bank approved $200,000. He asked $8400 from the bank for the closing cost; but the bank only gave him back $6300. For a standard sale some seller will pay for it if it is already figured in in the asking price so if you pay the full asking price then you might get the closing cost.
0 votes Thank Flag Link Thu Feb 17, 2011
In my area there are several reasons for the seller not wanting to pay for closing costs with the biggest one being that most sales are short sales and the BANK isn't willing to pay for closing costs. There are very few standard sales here and they are selling fast without the seller having to pay additional costs. Some of the bank owned properties are paying around 3% in closing costs. I've noticed that even when the costs are stacked, sometimes the seller/bank won't pay the costs especially now that we're seeing multiple offers. You agent that has expertise in your area should be able to well advise you. Have them run comparables and see if stacking your costs make sense for all those involved.
0 votes Thank Flag Link Thu Feb 17, 2011
Sellers now in bad way due to Market Collapse. So, they already are having to take less for their property and their thinking is that the buyer should help by pay more of the expenses of the sale.
0 votes Thank Flag Link Thu Feb 17, 2011
Aloha Terri. A "Buyer's Market" is actually determined statistically by the amount of inventory in a particular market and how long it will take to sell through that inventory according to the pace of recent sales. (Called absorption rate). An absorption rate of over 8 months is considered a "Buyer's Market," from 5-8 month is considered a "balanced market" and under 5 months a "Seller's Market."

A Buyer's Market does not mean that the buyer gets everything they want at the lowest price possible, just as a Seller's market doesn't mean the seller gets everything they want at the highest price possible. Buying and selling real estate is a negotiation, which is why you want to be sure to hire your own representation - a Buyer's Broker that is going to work for you and negotiate the best possible price and terms on your behalf.

Best of luck in your purchase!
Warm aloha,
Katie Minkus, R(B)
Broker-in-Charge Hawaii Life Real Estate Brokers
Web Reference: http://www.hawaiilife.com
0 votes Thank Flag Link Thu Feb 17, 2011
A buyers market is reflected in the pricing and home values, Terri--the other terms of the sale are always going to be contingent on the bottom line--remember the seller is looking at teh net from the sale ultimately--if the price is already at a discount, there may well be no more room to cut corners!
0 votes Thank Flag Link Thu Feb 17, 2011
It is a buyer's market but it is not like buyer's markets in the past. Many sellers owe nearly as much or more than the value of their home. The sellers may not have the equity to pay for closing cost.
0 votes Thank Flag Link Thu Feb 3, 2011
I believe that the sellers feel that they have lowered the list/asking price for thier properties and do not feel that they need to offer to pay the buyers closing costs or even a portion of the buyers closing costs.
0 votes Thank Flag Link Thu Feb 3, 2011
I would say that it is a Buyer's market because the prices have dropped significantly along with the equity and most sellers are walking away with little or no cash and some are having to bring cash to close. I would say most sellers are not going to pay the buyer's closing costs because they simply cannot afford to do so. I would say for most it would add insult to injury. If you are wanting help with closing costs consider purchasing a Fannie Mae property or going FHA or VA where you can ask for concessions to be put towards those costs. Best of luck to you.
0 votes Thank Flag Link Thu Feb 3, 2011
It can depends on how the sales offer is presented to seller AND be able educate all parties how this works on paper. In many instances Seller MIGHT not have that much money remaining to pay for your closing costs
0 votes Thank Flag Link Thu Feb 3, 2011
Dear Terri, This is a two way street. Seller's have to swollow hard as they reduced and reduced to get a buyer to make an offer. Paying closing costs for the buyer, is just one more financial loss in the eyes of the seller. It's great if it works like this. If the buyer is willing to come up in their offer to help offset the closing costs, then the seller can afford to offer it. But then again, if the buyer is getting a mortgage, the house must still appraise for the agreed upon sales price. It's just hard for everyone right now. The best answer to your guestion is - you must give to receive. The point is not to win or lose. The point is to have both parties feel that they got a fair deal at a time when the market was very unfair.
0 votes Thank Flag Link Thu Feb 3, 2011
Due to prices being so low.It is sometime difficult for a seller to give any closing costs. The selling price may just allow the seller what is needed to sell and pay commission or allow for a future purchase.
0 votes Thank Flag Link Thu Feb 3, 2011
Most sellers are holding out for your Highest and Best offer on their property. Many sellers are upside down in thier mortgages and want if all possible to walk away from the closing table with a little money! Most sellers are also willing to work with buyers in any way that will help sell the property.
0 votes Thank Flag Link Thu Feb 3, 2011
Hi Terri, There is another point that noone has touched on. To get the home financed it must appraise at the purchase price. There are exceptions (like Homepath financing).There is little room there to pay closing costs. Also, it depends how A sellers home is priced. If its priced low and under $200,000 in our market right now people are overbidding. Highest and best offer wins! Hope this helps!

Best Regards,
Joelle Embres
Re/Max ParkCreek
954-254-2054
jsellhomes@live.com
0 votes Thank Flag Link Thu Feb 3, 2011
The sellers that I have been meeting with lately have very little room for closing cost. The buyer's want to low-ball the price AND ask for closing cost. We have been advising our sellers to list at lower prices to get their homes sold, which leaves little profit in the pot for them to buy a replacement home. If you offer full price for a property, the seller should have enough left over to contribute to closing cost.
0 votes Thank Flag Link Thu Feb 3, 2011
As previously noted, it's about the bottom line and equity. The sellers want to sell, but they owe too much on their homes. They can't afford to sell and then, on top of that, pay your closing costs.
0 votes Thank Flag Link Thu Feb 3, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Uhh...."any" equity...........
0 votes Thank Flag Link Thu Feb 3, 2011
Simple answer: sellers don't have an equity in their homes, there ain't no money there.....
0 votes Thank Flag Link Thu Feb 3, 2011
Terri,
It's all about the bottom line. As Tim notes, if the seller can walk away with the amount they need, there is no reason to pay closing costs or other allowable concessions. If you need the seller to pay, raise your price to net the seller the bottom line they are willing to accept.
0 votes Thank Flag Link Thu Feb 3, 2011
Hi Terri....Tim is definetely on the right track. A lot of sellers have a dollar amount that they need to walk away with from the house. For example if you offer $200K with $10K back in closing costs the seller is only making $190K...so if the seller wants to net $200K just offer them $210 with $10K back in closing (numbers are just an example). Also, you are essentially rolling the $10K in closing costs into your mortgage but getting it back in cash for closing costs from the seller. So, your mortgage will be higher (as opposed to if you did not ask for closing costs). However, keeping $10K in your pocket can be very necessary and or appealing to yourself and a lot of buyers (esp 1st time homebuyers who have to buy furniture, dishes etc...). Talk to your lender and see what difference the closing costs would make in your mortgage, in all reality it probably will not make a huge difference in monthly payments but keeping that cash in your pocket can affect you greatly. Hope this helped!
Web Reference: http://www.donnarhomes.com
0 votes Thank Flag Link Thu Feb 3, 2011
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