hello - we have a credit from the seller for closing costs.

Asked by Kate Fulford, Portland, OR Thu Jul 31, 2008

what happens if the closing costs end up less than the credit? how can those funds be applied?

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7
Wa Macdonald, , Pittsburgh, PA
Fri Aug 21, 2009
If it appears that the closing costs will not come to the total seller concession, ask the lender to "buy the rate down" with a point or so, to eat up the "lost" closing costs.
1 vote
Tom Inglesby, Agent, Portland, OR
Thu Jul 31, 2008
Your agent should have written the words to include any prepaids and allowable closing costs not to exceed x. You should of had this figured out when you wrote the offer. A warranty might also be a way to get some back but it is up to the seller to give the extra to you and they are not required to. Good Luck

Tom Inglesby, Broker
RE/MAX Equity Group Inc
503-495-5416
1 vote
Dirk Knudsen, Agent, Hillsboro, OR
Thu Jul 31, 2008
Here is how it works. If you ask for an amount of closing credit form the seller and the lender does not or can not use it all the seller will keep the additional amount. You can ask for a price adjustment for the difference but if it is last minute it can really mess things up!

This is a good time to ask your realtor and Lender what will happen and how you can take advantage of this $$. Asking for a Home Warranty, some personal items, or some other in kind consideration is a smooth way to handle this as well.

Sellers have a way of not wanting to pay the amount if you do not use it as it is not implicit in the language that you will retain any difference.

It happens all the time and this is a great question as I am not sure we have had this one here on Trulia before.

I hope you get it if you are due the credit! Most reasonable sellers just want to close right now!

Best of luck;

Dirk Knudsen
#1 Rated Re\Max Team in Oregon
503-799-8383
Web Reference:  http://www.nwhomcenter.com
1 vote
Julie Fugate…, Agent, Tualatin, OR
Thu Jul 31, 2008
Typically, the wording for a credit is "up to ..." so that the seller pays up to an amount but is not obliged to pay that full amount if the closing costs are not that much. However, technically, if your contract does not contain that language, the remaining amount will simply be a credit to you and applied to your overall costs at closing.
1 vote
Tim Stuart, Agent, Canby, OR
Wed Aug 13, 2008
Kate,
Without seeing the exact verbiage on the contract, there is not much one can do as far as a correct answer on this one! Typically a professional broker would use verbiage to the effect of: "Seller to pay up to $X of closing costs, prepaids, " However if your contract states that it is for closing costs, it can only be used for actual closing costs, as the Title Company is a third party and have to follow the contract and State laws. There are allot of things that are considered closing costs, ie. prepaids (include prorated Taxes and escrow hold backs for ins., etc.) prorates. Good luck and if it's not too late have your broker cover that prior to closing.
0 votes
June Lizotte,…, , Portland, OR
Sat Aug 2, 2008
Since you didn't indicate the exact wording used we can only assume your agent did not use the wording "seller shall pay $XXXX.00 toward buyer's cc, pp and credits as allowable..." Here are some things you should do:
You or your Realtor should talk to the Escrow agent and ask how they are 'required' to handled it the way its written in the contract. From there you will know how to approach the seller regarding any remaining funds. Depending on the type of loan you have, you may be able to have the remaining funds applied to some of the prepaids or to have your interest rate bought down a bit. Your mortgage broker should be able to tell you if they can do that and should have suggested that to you. Check with all of these parties Escrow agent, (as described with the question above), Mortgage Broker (to ask if the loan will allow the extra funds to buy down the rate and cover pre-paids), and your Realtor (to request any needed changes to seller in writing right away). You may, as some of the other agents mentioned, ask to have some applied by seller providing a Home Warranty as well. However, because the negotiation peiod is already ended this will have to be approached very diplomatically because the listing agent will be representing the best interests of the seller and it would seem pretty obvious that they are pleased that they may not have to put out all the money written into the contract if your agent didn't word it to be all inclusive. Best to you!

Disclaimer: The web address provided and answers written in this forum are not meant to solicit business away from an agent you have an agency agreement with; it is there as free information and for other unrepresented readers who may be interested in contacting me for future real estate related advice and or representation. All information provided by me in this forum is subject to seller/buyer investigation and is not meant to be legal or financial advice.
Web Reference:  http://www.junelizotte.com
0 votes
Thesa Chambe…, Agent, Bend, OR
Thu Jul 31, 2008
This all depends on your contract and your loan... talk with your agent -
0 votes
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