Home Buying in Port Arthur>Question Details

Scott Mcdona…, Home Buyer in 77705

Who should pay closing costs, The buyer or seller? or split?

Asked by Scott Mcdonald, 77705 Wed Dec 1, 2010

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Hi Scott,

Your question is directed at? Are you looking to have the seller pay your closing costs for you?

There are closing costs associated with both sides of a transaction, This has been a much talked about thing to do when buyers make an offer having the seller pay the buyers closing costs.
I find that asking for closing costs usually does not work. It really is just a way for a buyer to make a lower offer.

Seller, unless they are offering closing costs as an incentive to sell their home, usually balk at this when presented.with an offer and paying the buyers costs.
2 votes Thank Flag Link Wed Dec 1, 2010
Scott,

As Guy mentioned, the transaction costs are somewhat divided on the standard Texas contract form. However, there is also a line in the contract that allows the Seller to contribute to the Buyers closing costs, picking up more of the tab than is specified in the contract. Lenders usually limit the amount that a Seller can contribute to Buyer closing costs (generally 3% of purchase price in a conventional loan, up to 6% in an FHA contract).

Hope this helps.

Greg
2 votes Thank Flag Link Wed Dec 1, 2010
Both buyer and seller typically end up paying something depending on what you've agreed to in your negotiations. Make sure to talk to your agent about all of your options. They should be able to point you in the right direction.
1 vote Thank Flag Link Wed Apr 9, 2014
It really all depends on the other terms of the contract and then there are certain items that both parties must pay, depending on the loan type and other parameters. It's best to call an Accredited Buyer Representative, because although we are normally paid by the listing Broker, we work for your best interest and can help you decipher all the fees and costs which are neogiated before the contract is signed.
1 vote Thank Flag Link Mon Oct 31, 2011
Both a buyer and a seller incur costs. Who pays what depends on the customs in your area and the agreement between the parties. A seller may pay all or part of a buyer’s costs if the deal makes sense. The agreement is usually imbedded in the contract but could be the result of negotiations done during the escrow processing period.
Your agent should be able to readily answer your questions.
1 vote Thank Flag Link Wed Dec 1, 2010
Both buyer and seller will have their respective closing costs as stipulated in the contract form. The amount that each party pays is typically part of the negotiations between the parties.
Web Reference: http://www.phgbrokers.com
1 vote Thank Flag Link Wed Dec 1, 2010
what are the normal closing cost for buyer and seller on a home in Arizona
0 votes Thank Flag Link Tue May 19, 2015
My realtor says it is now customary for sellers to pay the buyers closing costs. I really question this.
0 votes Thank Flag Link Wed Apr 9, 2014
UNIQUE METHOD I USE ALL THE TIME........AS A "BUYER"....AND YOU WILL NOT FIND IN A BOOK.....REALTORS FLIP OUT AND WONDER WHY IN AWE.....BUT I GET MY PRICE.

EXAMPLE: PRICE OF HOME SELLING : $100,000
I FIND OUT WHAT SELLER OWES ON IT.
I THEN FIND OUT WHAT HE IS ACTUALLY WALKING AWAY WITH ( VERY IMPORTANT)
SAY HE OWES 62K. IN THIS EXAMPLE - USING 8% SELLERS CLOSING COST = 8K.

* NEXT I CALCULATE APROX WHAT HE WILL BE WALKING AWAY WITH IF I PAY HIM 100K
* THIS COMES OUT TO 30,000

THE BAIT AND SWITCH: OFFER: AS BUYER - I WILL PAY YOU 85,000 FOR YOUR HOME - BUT I "INSIST" ON PAYING EVERY CENT OF ALL CLOSING COSTS FOR YOU.

* CALCULATED: 85,000 TO SELLER, LESS HIS NOTE = 23,000 WALK AWAY
* CALCULATED: 85,000 OFFER ACCEPTED, BUYER ( ME ) WILL PAY TOP END 11% TOTAL CLOSING COSTS ( THATS SELLERS AND BUYERS APROX. CLOSING COSTS COMBINED). THIS MEANS
85,000 + 9,350, = 94,350. I GET THE PROPERTY FOR 5,650 LESS THAN ORIGINAL ASKING PRICE OUT OF MY POCKET.

QUESTION OF YOUR MILLINIUM: WHATS THE CATCH AND ADVANTAGE?

1) SELLER IS WALKING AWAY WITH 7,000 LESS THAN HE WOULD OF AT ORIGINAL 100,000 ASK IF HE PAID HIS CLOSING COSTS. HOW MANY DEALS ARE WALKED AWAY WITH A "NO" OVER 7K ? NOT VERY MANY!

2) BUYER ( ME ) IS SMILING. WHILE BOTH THE BROKER AND SELLER ARE ITCHING TO KNOW WHY I INSIST PAYING FOR SELLERS CLOSING COST........I SHOW THEM THIS:

ADVANTAGE TO ME ( THE BUYER).....THE SALE PRICE IS 85,000. CLOSING COSTS ARE NOT INCLUDED IN SALES PRICE OR PROPERTY TAX EVALUATION....EVEN THOUGH IM PAYING
TOTAL OF 94,250. THIS 94,250 WILL NOT SHOW UP ON THE TAX FORM.......85,000 WILL. THIS, ALONG WITH THE FACT THAT I SAVED 5650 ON THE DEAL....SET UP A LOWERING/PROTEST TO THE CURB SIDE TAX MAN......AND LAUGHING OUT LOUD.

ADVANTAGE TO SELLER: HE GETS HIS WALK AWAY MONEY VERY CLOSE TO WHAT HE WOULD OF IF HE PAID HIS CLOSING COSTS. HIS SALES TAX IS 85,000....NOT 100,000....AND THE SALES TAX HE PAYS DOES NOT INCLUDE CLOSING COSTS. YOU BREAK IT DOWN TO HIM LIKE THIS ..." ARE YOU GOING TO SAY "NO" OVER 7 K WHEN IM LOWERING YOUR SALES TAX ?

NOTE: NOT ALOUD WITH VA LOANS....ONLY CONVENTIONAL.

YOU WILL NOT FIND THIS IN ANY BOOK......99% OF REALTORS DON'T HAVE A CLUE.....AND ARE VERY PERSISTANT TO WHY A 'BUYER' INSISTS ON PAYING ALL FEES ON BOTH SIDES. WHO GETS UPSET: THE AGENTS ON BOTH SIDES "UNLESS" THEY AGREE TO SPLIT BETWEEN THEM 50/50 COMMISSION.

EVERYONE INVOLVED WINS....A WIN-WIN FOR ALL PARTIES IF THE AGENTS AGREE TO SPLIT COMM.

I INVENTED THIS....USE IT EVERY TIME. 100% LEGAL. EXPECT YOUR SELLER TO STAY UP AT NIGHT TRYING TO FIGURE OUT WHY YOU INSIST ON THIS. IT'S ALWAYS A FUN EXPERIENCE WHEN I BUY.
THE LARGER THE INITIAL BID....THE FUNNIER IT GETS BECAUSE YOU DECREASE EVEN MORE - SAME CALCULATING.

TRY IT!

bp

2)
0 votes Thank Flag Link Wed Jun 13, 2012
You didn't "invent this" dear homebuyer. Others have been doing that for years. It's also used by sellers. I've never needed a real estate agent in buying or selling, but not everyone should try without an agent. I helped sell a relative's property and when the buyer simply wouldn't come up anymore and the relative wouldn't come down anymore I simply told the buyer they pay all closing costs and the sale price they offered would be accepted. They said yes, even though they ended up paying more than if they would have accepted my relative's counteroffer and the closing costs would have been split up in the customery way in this state. For me personally, I've never had to negotiate when selling a house on my own since I offer it at the price I know I can get and will accept and I simply stick to it. I've declined negotiations and buyers would leave only to call days later to see if it was still for sale, but sorry it already sold for my asking price.
Flag Thu Jun 5, 2014
Nicely done! In the market now and will try this technique- thanks for sharing!
Flag Sat Jan 4, 2014
Typically the Buyer pays for their down payment and closing cost. However, the Buyer can ask the Seller to pay for the closing cost and the Seller will generally pay. They can pay any portion or all of the Buyer's closing. Let's get started on that home you are looking for. You can email me at: hermayn47@aol.com or herma1realtor@aol.com
0 votes Thank Flag Link Mon Dec 20, 2010
Scott,

There are costs that are shared in a typical real estate transaction. IE: the seller typically pays for the owners policy and if a Survey is not available for the purchase the buyer typically pays for that. Other costs are split between the buyer and the seller.

If you are talking about the closing costs for your loan those are the buyer's costs but many buyer's prefer to roll some of them in and will present an offer to the seller with a fixed amount of funds going towards the closing costs for your loan.

When you make an offer with seller credits you need to typically increase your offer to account for these costs.

Good luck to you with your home purchase.
0 votes Thank Flag Link Thu Dec 2, 2010
Both...the seller has the majority of the closing costs in most cases, but the buyer will also have closing costs. So they are split, but typically not equally. As a buyer you likely would not like them split equally.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Dec 1, 2010
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Buyer has costs and seller has costs.

If you shift costs to the seller..... then the seller will demand more for the home.

Cash poor borrowers will ask for seller to pay more costs and finance those costs with a higher sales price....over 30yrs. In other words, you pay those costs over and over again by financing them.

Cash rich borrower will pay their share of the costs.

Smart buyer who understands how money works will look at both options. Then decide whether to take money out of a market that can earn 7% or more and sink it into a loan costing 4% or so.

So.... your answer is..... Which borrower are you?
0 votes Thank Flag Link Wed Dec 1, 2010
Each party has their own closing cost expenses . Your buyers agent can assist you in structure of sales offer regarding closing costs.

Title company has work on behalf of both parties to complete the sales transaction.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Wed Dec 1, 2010
HI Scott, when selling real estate the Owner/Seller has closing costs, realtor feee,attorney fees etc. The buyer has their closing cost,prepaids,escrows,downpayment,attorney fees etc..
When neg. a deal the buyer can ask for additional closing costs to help with the purchase.
We've never heard of Buyer paying for Sellers closing costs in NJ However it's often Seller who offers to help with buyers costs. not always but often.

All the Best
DAve & Lisa
Web Reference: http://www.urhomerealty.net
0 votes Thank Flag Link Wed Dec 1, 2010
The answer to this question really depends upon how the rest of the offer to purchase is negotiated. If you ask the seller to pay closing costs, they may expect you to pay more for the price of the home. If you pay the costs, you may be able to negotiate a lower sales price that will cost you less over the life of your loan. You should work with your Realtor to determine how you will write your offer to purchase. You should also work with your lender to get a specific dollar amount for the closing costs so you can decide what is the best way to write your offer. Good luck!
0 votes Thank Flag Link Wed Dec 1, 2010
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