Home Buying in 85388>Question Details

Tomd, Home Buyer in 85388

When buying a used home is it better to offer a price that does include closing costs from me, or does not include closing costs .?

Asked by Tomd, 85388 Mon Nov 21, 2011

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Tom, because of the current market conditions in the 85388 zip code, you should NOT ask for closing costs if you can afford to pay them yourself, if you want to present the strongest offer possible.

Here are the current market conditions for 85388 as of 11/22/2011:

Active Homes For Sale: 106
Homes Under Contract: 174
SOLD in Previous 30 days: 69
Absorption Rate: 1.53 MONTHS

This means that the current inventory level will be SOLD within 6 weeks, ONLY if every home is a desirable home. There are 3 types of markets based on SUPPLY or INVENTORY levels:

0-3 Months SELLER'S MARKET (Seller sets price and conditions, prices increase)
4-6 Months BALANCED MARKET (Negotiations are possible, prices remain steady)
7+ Months BUYER'S MARKET (Buyers are in control, prices fall)

The media is not reporting: "WE HAVE A HOUSING SHORTAGE IN THE PHOENIX AREA". Our inventory levels are down, the banks are holding some foreclosed homes and releasing them VERY SLOWLY, keeping our inventory levels below 3 months and therefore buyers are having a hard time obtaining a home. In addition more home owners are getting modifications and our foreclosed home level has dropped significantly.

Your agent matters...

Donald Keys
REALTOR Since 1997
Web Reference: http://www.DonaldKeys..com
1 vote Thank Flag Link Tue Nov 22, 2011
This depends on the price of the home relative to the overall market, the condition of the home and if you are going to have to put some money in it right away which would impact your short term cash flow. If the home is very desirable, in this market, you will be up against other buyers so you should expect to make an offer that will be appealing to the seller.
0 votes Thank Flag Link Sat Aug 17, 2013
You may want to consult a financial consultant. Comes down to this, if net price is the same would you rather pay the closing costs out of pocket (lets call them 3%) or pay a slightly higher price on the home & have the sellers pay them, leaving you with cash in your pocket. I always try & get closing costs for my buyers paid for.

Best of luck.
Spirit
0 votes Thank Flag Link Tue Nov 22, 2011
Tom,

First of all it has nothing to do with a new or used home, the concept is the same. Having the seller contribute to your closing costs is a good thing. It lowers your out of pocket and allows you to make the seller pay for your costs. The price that you offer though will need to be increased by the amount of the closing costs to offset the discount. In a tight market where others are offering asking price or higher, you will need to be even more competitive in your offer. I always advise my buyers to ask for it and just bump up the offer amount by that amount. Example, if you want a $100,000 home and want to offer $100,000. You would offer $103,000 with $3,000 coming back in closing costs. This does not work well in a declining market as there are appraisal issues. So to answer your question, it is beneficial for some buyers to have their closing costs paid for by the seller, if they are trying to keep their out of pocket lower. Essentially, you are financing the amount you are asking for back in seller concessions. Hope this helps.
Web Reference: http://brianrocca.com
0 votes Thank Flag Link Tue Nov 22, 2011
Donald, great response with real fabric supporting the market conditions. If I were purchasing a home in 85388 I would think carefully before placing may offer at a significant disadvantage.

Deferring closing costs is the same as requesting a price reduction. In a competitive market, your terms and conditions must more than compensate for this provision, but, you need to start the conversation somewhere. Just don't wait too long.
0 votes Thank Flag Link Tue Nov 22, 2011
Tomd,
First, I hope you have a great agent working on your behalf. We can give you general answers, but there are always details a good agent picks up that may cause them to recommend a different approach.
In general, any offer with closing costs is no different than an offer with an equivalent discount. To the seller an offer of $300,000 with $5000 in buyers closing costs is the same as an offer of $295,000. The exception is when a seller is hung up on their "number" but it really doesn't matter.
A good agent working on your behalf will talk to the sellers agent and try to uncover issues that are important to the seller. This may be price, closing date, vendors for Title & Escrow, fixtures that they may want to take with them. Giving the seller as much of the non-cost items they want or need increases the chance they will consider your price, even if its less than they want.
If you need closing costs, ask for them, but just remember a $5000 discount and $5000 in closing costs are the same as a $10,000 discount to the seller.
0 votes Thank Flag Link Mon Nov 21, 2011
First answer is spot on...it depends on the many factors.

Should you have a Realtor guide you, write down his answers and ask it in this forum again to see if he's on the right track.
0 votes Thank Flag Link Mon Nov 21, 2011
It depends, is the answer! That's why you should get a good realtor to guide you. There are so many variables, like whether it's a foreclosure or regular sale, is it likely to have multiple offers.... These are all questions that your agent needs to research for you to make a decision for your strategy! Best, Terry Bell, Realtor, Santa Rosa, CA
0 votes Thank Flag Link Mon Nov 21, 2011
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