Can Long Island buyers ask sellers for concessions such as having the sellers pay a percentage of the full amount of the closing costs of the house?

Asked by M, Old Bethpage, NY Wed Apr 27, 2011

On HGTV, when a buyer decides to buy a house, the buyer's broker, the majority of the time, when preparing the "offer" of the buyer to present to the seller, includes in the offer that the seller pay $5,000 or a percentage,
or in full, the closing costs related to the sale. As a new home buyer, I would like to know if I, too, can request
the seller to pay some or all of my closing costs when I present an offer to buy a house in Long Island, NY.

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Lisa Palermo, Agent, Babylon, NY
Wed Apr 27, 2011
Good afternoon 'M'...
while i love some of the shows on HGTV, the best advice i can give you as a first time
homebuyer is first, be sure you are working with a buyers agent, someone who is representing
your best interest, second, speak to a mortgage rep to see how much home you can reasonably
afford, then, when you find a home that you feel is the right fit for you, you will have yourself lined
up to know, how much of a down payment you can afford and what is the max offer you will be
comfortable making, knowing what your payments will be.. If you need a sellers concession you
are cutting things close.. and it will appear to the homeowner that you may not be able to afford
the home, deminishing the credibility of your offer.
are you working with a buyers agent now.?
best regards,
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Mike Ahmed, Agent, Deer Park, NY
Wed Apr 27, 2011
Yes you can up to 3% from selling price.
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Patrice, , New York
Wed Apr 27, 2011
Buyer should ask his own lender what %, if any, the seller can contribute toward closing costs. Every different mortgage product has different guidelines with respect to 'seller concession'. FHA mortgages up to 6% of the sale price of the home.... (then some small print) . ALSO: Any contribution made by seller comes off his bottom line, so his net proceeds are less. If that is not possible,you may be able to increase the purchase price to accommodate the seller contribution. This simply results in 'financing' the closing costs over the term of your mortgage. Not always wise unless necessary. Best of luck to you.
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Thomas McGiv…, Agent, Farmingville, NY
Wed Apr 27, 2011
First of all M - STOP watching tv shows! lol

I'm partially kidding of course but I tell you, those shows are ridiculous. It's make believe.

And a "seller concession" in terms we use here in real life - on Long Island - are borrowed funds that YOU the buyer are going to use to pay for a portion of your closing costs (up to 6% with a FHA loan). You, the borrower, ask the seller to "concede" a portion of the purchase price as money you'll use to pay your closing costs (home must appraise for the purchase amount).

What you're watching on TV is...TV.

Yes you can ask a seller to pay part of your closing costs but this is NOT typical and usually treated as a joke of sorts. When you make an offer - make it and let the chips fall where they will. Asking for sellers (in a terrible market who've watched the value of their home drop over 35% in most towns) to pay for anything is just setting your offers up to fail.

Just my opinion. Have you considered working with an agent?
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Franklin Bla…, Agent, New York, NY
Wed Apr 27, 2011
In very simple language yes. We use the terminology of a seller's concession. There are guidelines that need to be considered when asking the seller to include some or all of the closing fees. You need to seek the advice of mortgage lender in answering your question as to the specifics of how much can be included.
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Anna M Brocco, Agent, Williston Park, NY
Wed Apr 27, 2011
If you don't have an agent, consider the idea, he/she can best negotiate on your behalf...don't rely on tv show information, circumstances do vary--a seller's concessions, occurs when an agreed price is reached, but one is short on closing costs--as an example, you agree on a purchase price of 100K and are short, 3% closing costs, that 3% gets added to your mortgage and credited back once the sale takes place, thus your closing costs; keep in mind that the property needs to appraise for the higher number.... if you need additional assistance, feel free to contact me directly.
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Gail Gladsto…, Agent, 11743, NY
Wed Apr 27, 2011
Anyone can put in an offer with a sellers concession built in. It is important however to make sure the inflated sales price can survive a bank appraisal.
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Tim Moore, Agent, Kitty Hawk, NC
Wed Apr 27, 2011
You can request anything and the sellers can refuse, accept or counter the amount. A seller looks at concessions as taking off that amount from the offer, in other words an offer of $100,000 is the same as one of $105,000 with $5000 in closing costs. There are some tax advantages for them paying the closing costs but a seller looks at it like money out of their pocket. Some loans will not allow the seller to pay more than a certain percentage, so ask you lender. Don't believe everything you see on those tv shows either, some I have seen were filmed 3-5 years ago when times were better and still are being shown.
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Helena Genti…, Agent, Plainview, NY
Wed Apr 27, 2011
Seller's Concessions are allowable on Long Island. The maximum percentage at this point in time is 6%. This percentage can be applied toward the buyer's closing costs, should the seller allow and the home still appraise.

If you have any other questions or need some guidance, feel free to contact me. I can be reached at 631-319-0052.

Helena Gentile
Charles Rutenberg Realty
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