Melissa, Home Buyer in Pennsylvania

How does seller assist work? If the seller is willing to pay 6% of the closing cost , does that 6% get added

Asked by Melissa, Pennsylvania Thu Apr 24, 2008

on to my morgage. Ex. the house is 100,000 the seller pays 6,000 at closing, do I then take a morgage foe 106,000. Help!!

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Chris & Step…, Agent, Philadelphia, PA
Thu Apr 24, 2008
You can do either or. The seller assist is a huge misunderstanding in the real estate market. There are many ways to explain it. In your case above, a deal can be 100K with 6 percent assist where the seller nets 94 or it could be 106K wih 6K assist where the seller nets 100K.

Either way, the contract price becomes what you are mortgaging or at least what your downpayment is based off. Thus, in essence, your sellers assist is being financed over the term of the mortgage instead of paying for it today. It works well with buyers who need the money to close on a house or who need some money leftover for potential repairs and/or upgrades.

For more helpful hints, visit our website below. Good luck !
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2 votes
joshearl, Both Buyer And Seller, Cranberry Twp, PA
Thu Mar 14, 2013
The link below is helpful in understanding what seller assist really is. My favorite quote:

"It should be called 'funds borrowed by buyer for closing costs'.

It's a concession, or "assist," from the seller because the seller is agreeing to assume more risk. The deal is more likely to fall apart for financial reasons because a.) the buyer doesn't have enough cash to cover closing costs, and b.) since the buyer is taking out a larger mortgage, the home has to assess for a higher value.
1 vote
Wa Macdonald, , Pittsburgh, PA
Wed Jul 22, 2009
I concur with Jason Sardi. FHA, Fannie Mae and Freddie Mac, and VA all permit a 6% seller assist based on specific underwriting guidelines. Understand that if the closing, prepaid, and escrow costs are less than 6%, only the actual costs will be paid under the seller assist. In other words, if the costs actually amount to 5%, only 5% will be allowed. You can run some online purchase scenarios on my web site. Please discuss the seller assist limits per program guidelines with a professional mortgage loan officer. The 6% comes off the seller's sale price.
0 votes
in all my research since selling our family home in August 2015.....I have yet to come across an example for a seller who agreed to seller assist at 6%.....on the HUD-1 I see no indication of a down payment being the seller assist figured on the price of the house.....minus the down payment???? thanks!
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Larry Potter, , Illinois
Tue Jul 8, 2008
Our Home Seller Assist works quite differently since there is no bank qualifying and we can deal
with credit scores as low as 500. Agents can use it as well as FSBOs and investors who are selling.
We normally can close in 30 days and sometimes as quickly as 2-weeks. We have a live presentation each Tues and Wed followed by a Q&A session where you can get all your questions answered. I will be at both of them myself.
0 votes
Jason Sardi,…, , 18106
Tue Jul 8, 2008
No. It would come out of the seller's proceeds. Just make sure the loan product you have allows for 6% Seller assist. Some limit you to 3%. Let me know if you need any help.

0 votes
Debt Free Da…, , 85260
Sun May 18, 2008
The seller assist come out of the seller proceeds.
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0 votes
Andres Munar, Mortgage Broker Or Lender, State College, PA
Fri Apr 25, 2008

Sellers assist works in many different ways. With the realtors I work with we do it based off of what we want the seller to net for example if you want your seller to net 100k you take 100k and divide it by 94% and you get a mortgage and purchase price of 106385(roughly). If you would of done it by just taking 100k time 6% you acutally get 385 less of sellers assist. Please let me know if I can be of any further assistance. Thanks and good luck
0 votes
John Agnello, , Clementon, NJ
Thu Apr 24, 2008
Hey Melissa, how are you?

To answer your question that would depend on how your offer was structured. Was it presented as $100,000 with $6,000 back or was the offer $106,000 with $6,000 back? In either case you are mortgaging the amount credited to you.

John Agnello
Long & Foster, Real Estate Inc.
(609) 320-6700 –Cell
(856) 856-2338 –Office
0 votes
John Badalam…, Agent, Wayne, PA
Thu Apr 24, 2008
Hi Melissa:

My learned colleagues below provide a good response.

Also, I would like to add that whatever you intend to do with Seller Assist, check with your lender to see what they will allow depending on the type of mortgage (FHA, VA, Ginnie, Freddie, etc.). Pay very close attention to make sure repair credits don't exceed your allowable Seller Assist amount, and also, that the appraisal will not be compromised because of the Seller Assist.

Your Lender and Realtor will guide you on this.
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