Home Selling in Durham>Question Details

Julia Kulla-…, Home Seller in Durham, NC

What is reasonable for closing costs? Buyer is asking us to add $4K for cosmetic improvements - paint, new fixtures, etc. as part of the closing cost.

Asked by Julia Kulla-Mader, Durham, NC Mon Feb 27, 2012

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What's reasonable is whatever the two of you can agree upon. Forget about what they're planning on using it for... just consider it part of the negotiation. Are you comfortable getting $4,000 less for your home, in the condition that it's in?

If the answer is yes, then accept. If the answer is no, then try to negotiate a better deal. It's really that simple.
1 vote Thank Flag Link Mon Feb 27, 2012
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Generally closing cost maximums are set by the buyer's bank. The can be 3% to 6% depending on the type of loan they are getting. As a seller you DO NOT HAVE TO GIVE CLOSING COSTS.

However, realize that many buyers don't have the funds to pay out of pocket their down payment AND closing costs. So, most sellers are willing to allow the Buyer to finance into the sales price the amount of their closing costs.

And in this case, as a seller if you home is not "cleaned up and ready for sale" then the buyer is asking that it be in better condition than the condition you are selling it in. So, instead of giving them a decorating allowance, you could go ahead and do the work yourself, or have it down before closing, and then sell the house to them for $4000 more.

If you do give a decorating allowance, that fee must be clearly spelled out in estimates for the work to be performed, and a licensed contractor must perform the work. So, the buyer cannot expect to get a $4000 check and then to paint or do fixups by themselves-- they have to hire a company, and they have to tell the attorney who the company is to do the work, and the attorney will write the check to that company.

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0 votes Thank Flag Link Tue Feb 28, 2012
I run across contracts where the buyer is asking the seller for a decorating allowance. The buyer thinks the seller can write them a check at closing, not going to happen. And don’t let them tell you it is okay to do it and not put it one the HUD1. Full disclosure. Good luck,
0 votes Thank Flag Link Mon Feb 27, 2012
Thanks for all the advice.

@Bill We are working with a realtor. The request is coming before we've signed an agreement. The home cost if we subtract the extra money is still within the ballpark of reasonable if we look at comparisons.
0 votes Thank Flag Link Mon Feb 27, 2012
Bbq....

Are you working with a realtor? Do you have a signed purchase agreement? Is their request after-the-fact? When you priced the home did you do so taking it condition into consideration? Can you justify your home's price through the use of comparison property?

It sounds like you are being squeezed for every nickel they can get......the options are simple, either negotiate or cave in but if you haven't had the home inspection yet....this may not be the end of your troubles.

Good luck,

Bill
0 votes Thank Flag Link Mon Feb 27, 2012
In response to your question regarding what's reasonable for your closing costs, as a Seller, in my opinion resonable is defined by you. What are you willing to pay out of the sales price in order to get your home sold, closed & funded. On top of your normal closing fees as the Seller, most Buyer's will come in and ask for extras as part of their negotiations. In my area, Lenders put a cap on what the Seller can legally pay for the Buyer in his closing costs... usually that is 6% of the sales price. This is the top of what you can pay for the Buyer at closing.... and when you add this to your normal closing costs as the Seller you are talking about a chunk of change. Always keep this in mind in your listing stratagy...
0 votes Thank Flag Link Mon Feb 27, 2012
Closing costs can vary depending what the lender will allow. It's not unusual for sellers to pay up to 6% of the sale price toward buyers costs in my area. What's fair to you really depends on your sale price, how much your proceeds will be, etc.
0 votes Thank Flag Link Mon Feb 27, 2012
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