Turbo, Home Seller in Florida Center, Orla...

Should the seller pay for the buyer's closing cost?

Asked by Turbo, Florida Center, Orlando, FL Wed Aug 25, 2010

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Buyers right now, especially first timers, are not typically sitting on a lot of cash. Many of the buyers I've been working with can barely scrape together their down-payment, but are still eager to take advantage of this unprecedented buyer's market. That said, a seller should always be open to the idea of paying the buyer's closing costs in order to get the deal done.

Say you have a home listed at $200,000. You have a buyer come along and offer $195,000 with $5000 towards closing. You net $190,000. You could hold firm on the closing costs issue, let your buyer walk away, and wait a few months for another one to appear. At that point, you've probably dropped your price and you're probably going to get a lower offer. Say you've dropped to $190,000 and now you get a buyer who doesn't need closing costs, but offers $185,000.

Which would you rather have? $190k in August or $185k in November?
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0 votes Thank Flag Link Wed Aug 25, 2010
Depends if it's necessary to get the deal done. It's all part of the negotiations. If the buyer does not have enough cash to pay both the downpayment and the closing costs, then adding them into the price of the property is really the only way that the deal will go through. As noted before, as long as you get the net that you are after, you shouldn't care. My FHA buyer's are automatically asking for 6% in the current market.

Good luck, Mark
0 votes Thank Flag Link Wed Aug 25, 2010
Turbo: Your question is not a "yes" or "no"! The seller is most interested in what the sale will NET to the seller. List price is $206,000. If the contract sales price agreed upon is $200,000, and that will net the seller the proceeds they are happy with, it is the same net with this senario: Buyer wants $6,000 paid by seller. Seller negotiates a FULL asking price on the contract of $206,000 and agrees to pay the buyer's $6,000.....same net proceeds to the seller. Now, "should" the seller pay? I don't see why not if the it doesn't cost the seller anything and the buyer is happy with the price they are purchasing the home in order to keep the $6,000 in their pocket. Hope this helps.
0 votes Thank Flag Link Wed Aug 25, 2010
Great question, depending on your circumstance and the strength of the buyer paying the buyers closing cost can be a benefit to both parties, One you get your home sold and they get into a home for what they can afford. However, paying for their closing costs does not mean you have to foot the entire percentage or take a net loss on your final take home net. There are many ways to negotiate that or other items that will allow you to walk away with more cash and still help the buyer have a successful closing with you.
0 votes Thank Flag Link Wed Aug 25, 2010
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