Home Selling in Chicago>Question Details

Sandy, Home Seller in Romeoville, IL

Does it help in selling your home to offer assistance with closing costs to the buyer.?

Asked by Sandy, Romeoville, IL Wed Jun 18, 2008

I have also heard of offering an additional bonus to the selling agent. Any suggestions??

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Assisting with closing costs will make your home stand out to Buyers from the rest in MLS if they need help. This is of course that your home is in-line with the comps and not outrageously priced.

If so, offering bonus to Selling Agent doesn’t matter. The Realtor's responsibility is to the client and their best interests, not commission or bonuses.
2 votes Thank Flag Link Wed Jun 18, 2008
After the home looks great and is priced great, I would give the home a 1 year home warranty for $304 and not offer to give an allowance or a bonus. It can make it seem like you are desperate and the house can not be sold by normal means. But of course you should always take the advice of your own real estate professional.
Web Reference: http://www.realtybob.com
0 votes Thank Flag Link Thu Jun 26, 2008
Sandy,
Much of it depends on your market environment. Also, it depends on the price of the home. Studies have shown certain price points regarding purchasing or selling a home. For someone purchasing an upper end property, closing costs aren't as important as price. Starter homes and one or two levels "up", purchasing is usually going to be based upon a cash flow decision.

Regarding the bonus to the selling agent, it could certainly help get your house shown over the competition. A buyer's agent who has 40 properties that meet the buyer's criteria will almost certainly narrow down the properties. A higher commission might entice that agent to keep yours in the running, provided the price is competitive and the house shows well. Of course, if yours is unique to the other properties and there isn't much competition, then a bonus or higher commission may not help.
Web Reference: http://www.tchurchwell.com
0 votes Thank Flag Link Thu Jun 19, 2008
Sandy
I suggest that you discuss the sale of your home with a Realtor that knows the local market. In every market there are different trends, and based on the market trends, your personal needs, and the subject property, different tools can be used.

If you need assistance and cannot find a local Realtor, let us know. Good luck
0 votes Thank Flag Link Thu Jun 19, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Speaking from personal experience, I would not have been able to buy my first property without seller help.

First time buyers are sometimes reluctant to place an offer on a property because they're trying to save a few more dollars to make sure they can close, and feel asking for help may make there position weaker or just don't like asking for handouts. For some properties, offering closing cost is an essential tool to get the deal done.

With the death of 100% financing, FHA home loans have become much more important. FHA (and I will request that any mortgage brokers out there politely correct me if necessary), in my experience offers up to 97% Loan to Value. As a seller, I believe you can contribute up to 3% of the purchase price to help with their closing cost. Typically, closing cost average 1.5-3% to the buyer. With this in mind, the buyer must still have cash funds to close. In the past, non-profit groups have offered a service where the seller can gift additional funds to the non profit, which can then further assist the buyer in the purchase. In recent memory, we had a closing with a similar financing situation, although the mortgage climate is very dynamic at the moment and this could have changed.

Another thing to be aware of is to make sure your property is eligible for FHA financing. The FHA has had in the past, many regulations regarding home owner's associations, developer controls, etc. that can affect eligibility for a property to be financed with FHA funds. Speak with a qualified mortgage broker to see if this may affect you property.

Dollars and cents are definitely a very motivating factor for buyers right now, but don't forget they many other things you can do to get your home sold.

Good luck with the sale!
0 votes Thank Flag Link Thu Jun 19, 2008
Hi Sandy. Yes. It helps out a ton. In this market, especially. Please give me a call if you are in need of a good mortgage broker. I have great incentives. I am out of Bolingbrook. (lifetime resident) 630-330-2229
0 votes Thank Flag Link Thu Jun 19, 2008
I would suggest that you work closely with your REALTOR to determine any and all negotiation strategies. Offering to pay for closing costs may be a good one. However, I agree with others who have answered the question re: pricing of your home. At least on the East Coast, we're seeing the market pick up. Homes priced correctly are moving in 30-60 days and some in an even shorter timeframe. You may not need to do anything if your home is priced correctly for your local market.
0 votes Thank Flag Link Wed Jun 18, 2008
Thomas, I know you weren't talking about 100% financing. You said that most buyers are required to put a minimum of 10% down and that's not true. We do 3% FHA and 5% Conventional all the time.
0 votes Thank Flag Link Wed Jun 18, 2008
Brandon - I did not refer to 100% financing. Fannie Mae has recently classified Cook County and the surrounding collar counties as a SOFT market, hence where 5% downpayments may have been available, FANNIE MAE is requiring 10% down - per the FANNIE MAE guidelines - in some cases, 15% may now be the requirement.
0 votes Thank Flag Link Wed Jun 18, 2008
Sandy, Brandon brings up good points regarding the down payment scenarios available today. You could also leverage FHA guidelines by offering to pay the 2.85% down payment on behalf of the buyer so the buyer is only responsible for closing costs, etc. With FHA you could actually offer to pay the 2.85% and closing costs if you were so inclined to accomplish a true 100% deal for the buyer. Please feel free to give me a call to discuss how to structure this type of deal.
0 votes Thank Flag Link Wed Jun 18, 2008
Sandy,
Honestly, I have no idea where Thomas Hall is getting his downpayment information. 100% financing is basically gone. We've emailed each other recently and I found out that you have 57 homes for sale in your subdivision. That's 56 other homes competing for a buyer, along with you. Money does talk. There's no doubt about it. FHA loans are a minumum of 3% down and Conventional loans are a minimum of 5% down. Over the past 12 months 49 homes have sold and closed in your subdivision. That's actually pretty good. I would say that a bonus and a credit to the buyer can't hurt. I do agree though that the asking price is the main issue here.
0 votes Thank Flag Link Wed Jun 18, 2008
Hi Sandy - The answer is YES! In light of stricter lending requirements, most buyers today are required to put down a minimum of 10% as a downpayment - some areas are requiring more depending upon FANNIE MAE lending guidelines based upon designated market conditions.

I believe providing closing cost credits allows potential buyers to apply more of their resources towards the downpayment, perhaps easing the concern that they may or may not qualify for a mortgage based upon a required downpayment, not credit worthiness. Most lenders allow up to 3% credits to be reflected on the RESPA.

Hope that helps!
Web Reference: http://www.thomasjhall.com
0 votes Thank Flag Link Wed Jun 18, 2008
Hello Sandy,

Yes, offering to help with closing costs does help. In these times anything that will bring your home more positive attention. You can also offer a home warranty or pay for their moving truck.
I would still lower your price, have an open house, update the pictures too.

Focus on the buyers needs and you'll get your home sold faster.
Good Luck,
Deana
0 votes Thank Flag Link Wed Jun 18, 2008
There are lots of things that you can do to help your home be more attractive to a potential buyer.

I would say that the number one positive thing you can do that will absolutely help you to find a ready, willing, and able buyer is to lower the price of the home.

An overpriced home with great incentives will get overlooked by the majority of buyers because it's out of the price-range for what they expect to purcahse (it won't even show up on the radar of their search).

A very well priced home will have buyers climbing over themselves to purchase before someone else does.

I would almost always recommend a price-reduction over incentives - but it ultimately depends on your specific situation. Call several realtors in your area and get their opinions.

If you'd like, I'd be happy to provide references to a couple of great agents in your area. Contact me at http://www.HernandoLuxuryHomes.com and we'll make sure you're taken care of properly.

Thanks,

-Josh
0 votes Thank Flag Link Wed Jun 18, 2008
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