In Pa if a buyer offers asking price plus a seller assist does the seller assist get added onto the asking price or deducted from the purchase price?

Asked by Bonnie, Pennsylvania Thu Dec 9, 2010

The buyer offers the full asking price of $200,000 with a 6%, $12,000 seller assist. The agent tells you that the buyer is offering to pay you full price but then deducts the $12,000 seller assist off of $200,000 on the sellers side of the settlement papers to state a purchase price of $188,000 from which the agent then deducts commissions for the buyers agent and the sellers agent as well as other expenses from the sellers proceeds bringing the proceeds to the seller down to $173,000. On the buyers side of the settlement papers the agent has $212,000 as the purchase price deducts the $12,000 as credited to buyer from seller for so that the buyers side of the settlement paper states $200,000 purchase price and then proceeds to deduct $12,000 from the sellers proceeds as seller assist in closing costs. The agents and lender calculated their commissions off of the $212,000 figure listed on the buyers side of the settlement papers. Is their something wrong with this picture?

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Phong Lam, Agent, Philadelphia, PA
Thu Dec 9, 2010
Good Morning Bonnie,

How are you? Thank you for your inquiry. If you have an agent working for you, all of this should have been explained to you in details, or even before you post up your house on the market or when an offer comes in (so you'll get an idea of what you net proceeds are). But here's my take on your question and a brief overview of how your seller's closing cost is broken down:

If your home is asking and accepted at $200,000, it will be $200,000 showing on both sides of the settlement sheet as the purchase price. For seller side, it would be $200,000 MINUS 6% (which is $12,000) MINUS whatever the agent's listing fee was MINUS U/O City Certification MINUS Notary Fee MINUS your current mortgage balance (if you currently have any balance) MINUS any other miscellaneous fees, then that should be your NET PROCEEDS that you walk off the table with.

As far as the buyer's side goes, the $12,000 seller's assistance should be included in the $200,000 amount. So in technicality, the buyer is only offering $188,000 because you had to subtract the $12,000 from $200,000.

IF the buyer side is $212,000 as the purchase price, then your seller side of the closing costs would show $212,000 as the purchase price as well. And then that means the buyer is actually offering you a full price offer of your asking price because $12,000 will be deducted from $212,000 to make it become $200,000. That is taking into consideration that your mortgage company had an appraisal that allows them to lend out $212,000 amount to support the purchase price of $212,000.

Hope that helps! If you have any questions, please feel free to email or call me at (267) 918-1880.

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Phong Lam, CSM
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1 vote
Larry Lichtm…, Agent, Bala Cynwyd, PA
Thu Dec 9, 2010
There is absoutely something wrong. Maybe you are confusing line #s or terminology? Every HUD1 Settlement Statement only lists ONe Purchase/Sales Price. Funds due from/payable to each side may add up to a different total cost but the sales price remains one constant number for all documents.

You need to review the Agreement of Sale you executed to determine the numbers you actiually agreed to by contract. Good Luck. If you'd like my assistance reviewing your HUD1 and Agreement of Sale to see what happened, please feel free to call me. Have a great weekend.

All the best,
Larry B. Lichtman
REALTOR, Property Manager
Your Real Estate Resource For Life
(267) 254-7994
2 votes
Bruce Lang, Agent, Philadelphia, PA
Sat Jan 29, 2011
Dear Bonnie.

often the first HUD contains errorsand will get corrected. Did everything turn out ok? Usually in a chat with your agent, you can get everything resolved. If the contract says purchase price is 200,000 then is that case, the seller assist makes the "price" in the eyes of the seller 188k. Its important that when the offer was made a seller estimate of cloing costs is provided so everyone is clear about whats going on.
Obviously, if not resolved to your satisfaction, call an attorney.
0 votes
Kahlia Rhodes, Agent, Cityscape, PA
Fri Dec 10, 2010
The seller assit doe's not change the price it helps towards closing cost .Now in referance to the hud 1 they put 200,000 thousand because that's the purchase price the seller assit . Now most times the seller pays commission to the agent sometimes the buyer pay commission's but that's stated upfront in the conversation .If a buyer buys a foreclosed property
0 votes
Peter Lavelle, Agent, Philadelphia, PA
Thu Dec 9, 2010
Good Morning Bonnie,

It depends on the way the agreement is written. This should be discussed with your agent as they are representing you. It would be a violation of our Code of Ethics to discuss the details of your transaction if you have an agent representing you.
0 votes
todd james, Home Seller, Compton, CA
Thu Dec 9, 2010
Each transaction has its own unique situation, so you really would have to evaluate them to see which is a win win for everyone!
0 votes
Brian Yoak, Agent, Elkins Park, PA
Thu Dec 9, 2010
Please discuss this with your agent. There could be various ways that agents handle assistance. In my opinion the answers on here are only going to confuse you more. For instance some will have the commission come off the sale price minus the assistance and others do not. In my opinion I would never have my buyer offer over the asking price so that they have to finance the assistance. If that is the case it isn't assistance they are just borrowing the money against the mortgage. In a round about way if the sale price is $200k with 6% assist than minus approximately 14% from the sale price to include the commission, transfer tax and assistance in Philadelphia to get your net profit without a mortgage payoff if any.
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Thu Dec 9, 2010
Something is wrong somewhere. Here is how it would work in my market area unless there is something else in writing to change what would normally happen. We don't use the term seller assist we say seller paid closing costs.

Purchase price = $200,000 and the commissions would be based on this number.

From the total closing costs owed by the buyer they would deduct $12,000 that is paid by the seller for the buyer.

A seller just looks at it like he sold his house for $188,000 and paid commissions on $200,000.
0 votes
Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Thu Dec 9, 2010
The way that many of the agents, from what I read on Trulia, structure or approach these deals make them much more confusing than they should be. You should agree to the $188,000 purchase price, as what you want to gross. Then up the purchase price to include the closing costs of up to 6%. The real estate agents should really only take the 6% from your $188,000, not have you pay it on the seller's concession. Also, it is customary for the buyer to pay the difference in any transfer fees that there may be on the seller's consession.
that being said, because the realtor is the one who writes the contract, of course they are going to do it in a way that is beneficial to them. In no way, however, should the HUD list $212,000 as a purchase price on the settlement papers. I also can't believe that the lender would approve the HUD with that price, unless that is the price on your contract of sale.
0 votes
Joan LaMarch…, , Philadelphia, PA
Thu Dec 9, 2010
YES!!! Your agreement of sale states that $200,000 is the sale price and then states that the seller assist is 6%. In other words, the sale price is $200,000 NOT $212,000. All of the settlement sheets must state that the sale price is $200,000 with a seller assist of 6% ($12,000) if that is what was agreed upon in the agreement of sale. The buyers side of the settlement sheet must state the same. The commission is based on the sale price or the net price after seller assist ($188,000), if agreed upon.
0 votes
Monica Flor…, Agent, Langhorne, PA
Thu Dec 9, 2010
Hi, Bonnie, you may be misunderstanding the settlement statement or HUD1. You should ask your agent to carefully explain the charges/fees and their breakdown so that you're clear. You shouldnt have a question regarding your fees post-closing! All fees and breakdowns should be made clear before closing and again at the table.

In answer to your question, however, in this marketplace, seller assistance is usually deducted from the sales price unless otherwise negotiated. I will also comment that most appraisers will take into consideration if a price has been increased to cover assist as it falsely inflates the market value of the property.
0 votes
Igor Asnis, Agent, Feasterville, PA
Thu Dec 9, 2010
It is negotiable, can be added or deducted but it should be the same on both sides (seller and buyer).
0 votes
Maura Mcdonn…, , Philadelphia, PA
Thu Dec 9, 2010
Call me I can walk you thru. You cannot have different sale prices on each side of the Sheet. I can walk you thru. 610-291-1460. I have seen this done a number of ways.

0 votes
Jeffrey Ferr…, Agent, Brooklyn, NY
Thu Dec 9, 2010
added to the price and we do those programs. jeff ferretti 570 775 1996 or 917 952 1500
0 votes
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