Martha Parso…, Home Buyer in Minneapolis, MN

Are sellers still agreeing to pay closing costs lately? Or is that scenario uncommon/unlikely nowadays in Minneapolis?

Asked by Martha Parsons, Minneapolis, MN Fri Apr 20, 2012

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15
Hi, Martha!!

All good answers here!!! While there is a certain amount of individuality with each transaction, I would say that seller paid closing costs are very common in this market. We are working with lots of FHA buyers, who, frequently, don't have much more cash than what's required for their downpayment, so it's fairly regular that they will present the offer in such as way that they request the sellers to allow them to build their closing costs in to their offer price.

Does that help?? Let us know if we've answered your question adequately.

Good luck!
1 vote Thank Flag Link Fri Apr 20, 2012
Hey Martha,

Seller paid closing costs is nothing more than you financing your closing costs for your loan. When it comes down to it...if the bottom line number for the seller is acceptable to him/her...Then you will likely come to a deal and receive signatures on your offer.


Do you have representation? I would be happy to help when possible :)

Thank you,

Cody Anderson, MN Licensed Realtor

RE/MAX RESULTS
Metropolitan Home Team

Phone: 612-242-5752

Blog: http://www.trulia.com/blog/cody_anderson/
0 votes Thank Flag Link Wed Oct 16, 2013
I have definately noticed that the sellers contribution to closing cost has become very common.
0 votes Thank Flag Link Tue Oct 15, 2013
Most sellers don't have a problem as long as the home appraises for enough. Most sellers just add it to the sales price .

Joel Lobb (NMLS#57916)
Senior Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*
http://mylouisvillekentuckymortgage.com
0 votes Thank Flag Link Sun Sep 29, 2013
9 out of 10 of mine have over the last couple of years.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
0 votes Thank Flag Link Mon Apr 23, 2012
Hi Martha,

Yes, seller paid closing costs are common today. But is the seller really paying? Usually not. It is common for the closing costs to be added to purchase price to get the deal financed. Seller is getting their net (bottom line) and buyer is really just financing the closing costs in the mortgage. Some REO properties and short sales are limited to how much can be put toward closing costs. If you are a seller you know what your bottom line is. Add closing costs to this and you have the offer number that works for you.
0 votes Thank Flag Link Mon Apr 23, 2012
It depends. If you are purchasing a short sale or foreclosure it is a little different than offering a traditional seller. There was a particular bank that refused to allow any closing costs paid on their own foreclosures, but they have changed policy to allow up to 3% of the purchase price for buyer paid closing costs.
Most short sale properties that are lender approved will allow up to 3%, and they give instructions not to ask for more than that. Similarly, foreclosures usually allow 3%.
If you are making an offer on a tradtional home, remember that your offer is really the amount you offer minus the amount you are asking that the seller pay in closing costs.

If you are in multiple offers, you may want to inrcease your offer to cover closing costs if you are including them in the offer. You wouldn't want to be disappointed after making an offer to be out bid because of closing costs.
0 votes Thank Flag Link Fri Apr 20, 2012
Martha,

The easy answer is yes, seller paid closing costs are very common. The seller really isn't paying them however, the buyer just offers a higher price and includes the closing costs in their purchase price. The seller really only cares about their net and seller paids are just numbers on a piece of paper. As long as the appraisal comes in, everyone is happy:)

Thanks,

Dave
0 votes Thank Flag Link Fri Apr 20, 2012
Martha,

I am not sure if you are a buyer or a seller or maybe even just curious. Each tranasaction has 2 parties and the transaction has to work for both partiys in the end.

If you are the buyer and only have the amount needed for the downpayment required by the lender for the mortgage you are getting you will need to ask for seller conssions to make the transaction work for you. If you have a larger down payment and have the funds to pay your own clsoing costs it makes your offer look better to the seller becasue it raises their bopttom line. You will have to make the decision to ask for seller conssesion based on your circumstances at the time you write the offer.

If you are the seller you look at your bottom line. Depending on what you owe you may be restricted in what you are able to pay in seller consseions and what you can accept for a price. You also consider how strong your motivation is to move. In today's market a large percentage of financed offers with lower down payments are going to have seller conssesions requested as part of the offer. You may not want to pay them but if the buyer doesn't have the extra funds, sayig no to paying them may be saying not to that buyer entirely. The higher the price range the less likely you may be to see seller consessions asked for in an offer. Bottom line is that as a seller you make the decision about paying consessions when you have an offer in front of you and can consider all the factors affecting you at that time.

Jeff Byrd
Web Reference: http://www.eagleresults.com
0 votes Thank Flag Link Fri Apr 20, 2012
Sellers are often asked to pay the maximum allowed in closing costs. Loan officers frequently build that right in to the good faith estimate so that the bottom line looks more attractive to a buyer. The fact is that this is all negotiable and what I am seeing in the cities of Minneapolis and St. Paul, is that if the request for closing costs is coupled with a low offer, you can just forget it. If the offer is reasonable, many sellers are willing to pay a PORTION of the closing costs but it is definitely not a given.
Sandy Loescher, Broker http://www.SandyGreenRealty.com
0 votes Thank Flag Link Fri Apr 20, 2012
Sellers will agree to anything that makes sense and helps them to accomplish their goal. Some are willing to accept a bottom line that simply means they don't have to write a check to close. Others are prepared to write a check at closing. The market is such that sellers aren't generally expecting to walk away from closings with huge checks if they've only owned the home for 5 or less years and didn't put a lot down. The value of any home is determined not by the sellers but by what buyers are willing to pay...and that is determined by the other options available to buyers.

These are generalities. There's a lot of other details that determine the price the seller will accept. The market conditions of course are a big one. Neighborhood conditions, the condition of the home, matter too. What motivates sellers to sell varies widely and it could be a death, divorce, job transfer, high debt, loss of a job, a need to upsize or downsize, etc. How strong their motivation is determines what they are willing to do to assist a buyer to buy it and how deep they'll dig into their own pocket to sell their home. Keep in mind though, that many sellers can't afford to help much. Each case is different.

In most instances a buyer or person assisting a buyer cannot determine the seller's motivation. They often won't tell you. That's where experience counts. I would strongly recommend that you get an experienced buyers' agent to help you make the right offer and help with negotiations and assist in all the other details. The way this works is that you can usually find a good buyer's agent to work with you at no cost to you. It's the best free help you'll likely find...and I happen to know just such a person. Contact me for details.
0 votes Thank Flag Link Fri Apr 20, 2012
It will come down to the buyers needs and the amount of activity on your property. If you are competitively priced and are in a multiple offer situation or just lots of activity then they may just offer you above the list price and use the that extra amount for the closing costs. However if your activity on the property is low and they know that they may ask you to pay the closing costs. There are many other ways the buyer might structure closing costs in to the offer.


Kirk Duckwall
The Duckwall Team of Realtors
Edina Realty
Cell 651-303-0019
http://www.DuckwallTeam.com
Your Referrals Are Greatly Appreciated
Tune in to our Twin Cities Real Estate Radio Show Sundays at 10am on AM950
0 votes Thank Flag Link Fri Apr 20, 2012
Martha,

Sellers are generally being prepared by agents to accept offers with closing costs in order to glean the best sales price. Go in with confidence! If you aren't working with an agent, feel free to give a call or shoot an email over for more advice!
0 votes Thank Flag Link Fri Apr 20, 2012
Seller paid closing costs are very common these days. Depending on what kind of financing you are using you could received up to 6% seller paid closing costs. If you are working with a traditional seller then they have the flexibility to pay what you ask but most short sales and bank owned properties cap it at 3%.
0 votes Thank Flag Link Fri Apr 20, 2012
I am involved in 6 to 10 transactions a month and can tell you that it is very common for sellers to contribute to a buyers closing costs.
0 votes Thank Flag Link Fri Apr 20, 2012
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