Buyer/ Agent pay for closing cost

Asked by Alex, Plano, TX Mon Nov 2, 2009

The buyer is willing to give certain amount to be applied for closing cost and the agent will also credited some amount from his commision. The total is more than total closing cost including prepaid escrow account, etc. Is there any way to work around this so the buyer won't waste the credited money? Will the title company cut the check to Buyer for the remainig unused credited amount from Buyer & Agent?

Thanks for you help

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Bruce Lynn, Agent, Coppell, TX
Tue Nov 3, 2009
Typically you cannot get a check back at closing.

Could you include any out of pocket expenses you have already paid, such as option fee, inspection?
You might also be able to add 2 years home warranty expense, taxes, insurance, interest rate buy down. Check with your lender, agent, and title company.
1 vote
Dallas Texas, Agent, Dallas, TN
Thu Nov 5, 2009
All statements made from the professionals here are correct.

Without all details of who is do what with $xxx or $x,xxx amount for your benefit have your buyers agent place all facts in writing to line out particulars and your benefit.

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T.E. & Naima…, Agent, Dallas, TX
Tue Nov 3, 2009
If there is any money left, have the lender buy down the rate, collect an additional month of escrow, pay for inspection etc. We just did this on a VA loan and the buyer got in the house with no money down at all.

Make sure the rebate is shown on the settlement statement to avoid any fraudulent claims. Most lenders will not let the title company give you a check back at closing.

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, ,
Mon Nov 2, 2009
The only way you get any money 'back' is if you have money in the transaction. And you can only get up to that amount back. And anything done on the side will be mortgage fraud(a federal crime) if not disclosed to the lender.
You could use up some of the rest of the seller credit and buy down the interest rate..... that will benefit you greatly over the life of the loan.
You could even amend the the contract to adjust or the overage. I have had to do this many times when the agent doesn't ask before setting seller paid closing cost amounts.
0 votes
Dani Hanna, Agent, Wichita, KS
Mon Nov 2, 2009
I've seen this come up several times lately. You can execute an Amendment to change the purchase price and the amount of seller contribution at closing OR the title company can use some of that money to cover the property tax proration that the buyer owes. Check with your escrow agent for details. If you are getting an FHA loan, the Buyer's agent cannot give you any of their commission as they are an 'interested party' to the transaction. Good luck
0 votes
Helen Karuba, Agent, Dallas, TX
Mon Nov 2, 2009
You may want to talk to your lender and find out what they will accept and how they want it shown on the HUD settlement statement. As a rule, any money that changes hands must be shown on the HUD-1. In other words, no cutting checks after close. The agents broker can also have a say in it. The title company will do what the lender approves and instructs them to do.
Best of luck
0 votes
Alex, Home Buyer, Plano, TX
Mon Nov 2, 2009
Thank you so much for your insight. You are right, I meant Seller is willing not Buyer. My bad.

In this case, in order to not losing money on the table, should I have the Seller to sign the amendment for contract price to lower down the price? So total amount credited to me is below the total closing cost. Thanks again for your contribution to the community.
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Chris Tesch, Agent, College Station, TX
Mon Nov 2, 2009
Did you pay for inspections or an appraisal outside of closing? Perhaps you could submit those bills to the title company and get reimbursed for those items. Outside of that though Kim is correct and giving very good advice. The contract does specify up to a certain amount not that that amount would be it. When working with a client who needs their closing costs paid I usually will cut it as close as possible without going over. I always tell my buyer that I would rather them bring a little bit to closing as opposed to loosing money at the closing table.

Good luck!
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Kim Nwachukwu, Agent, Irving, TX
Mon Nov 2, 2009
I believe you mean "seller is willing" instead of buyer. The contract reads "up to $XXX in closing costs" for a specific reason. The title company will not cut the buyer a check; that would be participating in fraud. At closing both the buyer and the seller will sign testaments that state "there are no unwritten agreements" between them. Were one to write a check to the other that particular testament would be false. The title company will follow the contract - collecting only enough cash from the seller to settle the HUD.

Bottom line is this: if money changes hands in any fashion, and the lender is kept out of the loop, fraud has been committed. The question actually becomes is it worth the small amount of money involved to possibly be party to illegal and fraudulent activity? Hope this helps.
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