Is is common in this market for the seller to have to pay the buyer's closing fees?

Asked by Priuspaul, Broomfield, CO Mon Nov 15, 2010

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Suz A, Agent, Longmont, CO
Wed May 23, 2012
Typically, the seller is asked to cover the closing costs. There is a little negotiation involved. It does make the process run smoother. The seller can ask the buyer to pay a higher price for taking on this cost.
0 votes
Dianne Hicks, Agent, Rancho Bernardo, CA
Tue Nov 16, 2010
It just depends... Many banks are willing to pay some of the closing cost. Standard Sellers and Investers that are flipping homes do not like to pay a penny of them. It really comes down to what other offers are on the table. I have noticed that banks are less willing to pay closing cost when the type of financing is Conventional... doesn't really seem fair but I have seen this on more than 1 occassion.

Good Luck!!!

Kindest Regards
Dianne Hicks
HomeSmart Real Estate
Web Reference:  http://www.di4homes.com
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Emmy Byrne, Agent, Saint Paul, MN
Tue Nov 16, 2010
Keep in mind that the reason you ask the seller to pay your closing costs is because it cuts down your out of pocket expenses at closing. A lot of first time buyers do not have the funds for both a down payment and closing costs, so having the seller pay the closing costs is a good solution if you are short on cash. BUT -- remember the seller has a bottom line and your offer needs to not only meet his bottom line but also must include the amount you need for your closing costs. One way to look at it is that seller's are not going to generously pay your closing costs -- but generally they will allow you to fold them into your purchase price, so in effect you are financing your closing costs within your mortgage.
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Emmy Byrne, Agent, Saint Paul, MN
Tue Nov 16, 2010
Keep in mind that the reason you ask the seller to pay your closing costs is because it cuts down your out of pocket expenses at closing. A lot of first time buyers do not have the funds for both a down payment and closing costs, so having the seller pay the closing costs is a good solution if you are short on cash. BUT -- remember the seller has a bottom line and your offer needs to not only meet his bottom line but also must include the amount you need for your closing costs. One way to look at it is that seller's are not going to generously pay your closing costs -- but generally they will allow you to fold them into your purchase price, so in effect you are financing your closing costs within your mortgage.
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The NoCo Home…, Agent, Fort Collins, CO
Tue Nov 16, 2010
Priuspaul,
That is a great question that all my sellers are asking, and what I tell them is that yes, it is pretty typical in this market. However, your agent should work his best to keep you from having to pay them. I definitely wouldn't just offer to pay them up front. Make the buyer ask for them. If you are having a hard time paying them then maybe just offer to pay half of them.

Leslie
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Teddy Sonner, Agent, Washington, DC
Tue Nov 16, 2010
Having the seller pay the buyer's closing costs is common and is a way for the buyer to avoid coming up with as much money as they normally would. It's a way for a seller to perhaps get more for their property by helping the buyer have more money at the settlement table. Be sure to look at the bottom line - how much money will they walk away with? 500K with 10K in a credit to the seller is the same as 490K with no help.
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Esther Harns…, Agent, Littleton, CO
Tue Nov 16, 2010
Yes, it is common practice for seller to pay a portion of the buyer's closing costs. A good buyer's agent will usually include this in their contract offer to you. Have your realtor, if you have one, run you a net sheet so you have an estimate of what your bottom line take away $ is at the closing table. Are you currently selling or thinking about selling? If it is the latter, I'd love to have the opportunity to go over your options whether you engage a realtor or decide to do a for sale by owner.
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Catherine Be…, Agent, Lawndale, CA
Mon Nov 15, 2010
As you have already heard from the other experts, in today's market it is quite common to ask for the seller to pay for a part or the whole of the closing costs. However that is normally done with an eye on 2 important figures:
1. How will this effect the net proceed to the seller? That is the figure you should be concerned about, not wether or not you are paying for closing costs.
2. If you negotiate a higher sales price, will the house appraise for that amount? This is a critical factor, since if the house does not appraise for the full amount, the transaction will be in jeorardy.
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Laura Stewart, Agent, Greenwood Village, CO
Mon Nov 15, 2010
As you have already heard from many agents the resounding answer is that it is very typical for buyers to ask for assistance with their loan closing costs in the current market. This is a point of negotiation and your agent will be the professional to seek guidance from regarding structuring a "win-win" response to this offer on a counter. Depending on the activity of the showings that have occurred and the potential offers that may be forth coming your may or may not want to counter regarding this buyer request.
If you are selling your home on your own and need professional counsel from a Realtor please contact me directly via StewartSuccess@comcast.net. I wish you all the best with your successful sale!
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Betsy Moser, Agent, Broomfield, CO
Mon Nov 15, 2010
Yes, about 90% of the time....I tell my buyers that I'll build the closing costs in to the offer and the seller decides what their botttom line is. Sometimes we actually add a few thousand to the sales price to allow for the closing costs to be built in. With FHA, 3.5% is the required down payment and not having to have to pay the closing costs on top of that helps lots of buyers. Betsy Moser, Metro Brokers 303-332-9794
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The Kinslow…, Agent, Centennial, CO
Mon Nov 15, 2010
In my experience most Buyers in the under $250,000 market are asking for 3% towards their closing costs. Some of my Sellers have had the Buyers add the closing costs to the purchase price.

Sandy Kinslow
The Kinslow Team LLC
Coldwell Banker Residential Brokerage
0 votes
David Janis, Agent, Boulder, CO
Mon Nov 15, 2010
Closing costs are traditionally split 50/50 in Colorado; they normally run about $250 or $125 for the seller and $125 for the buyer. Seller also traditionally pays for title insurance which varies with the sales price.

Some of the agents below mentioned loan closing costs. Loan closing costs are only relevant whne the buyer needs a loan. These costs are as negotiable as the purchase price - sellers only look at the net proceeds of the offer which would included any concessions for loan closing costs.
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Leslie Monaco, Agent, Greenwood Village, CO
Mon Nov 15, 2010
I would agree with Gerard. Because it is a buyers market most buyer's agent's will negotiate around 3% of the purchase price for the Buyers if they need closing assistance. On the flip side, most Sellers understand that in this market many Buyers will ask for closing assistance. It is better for you to expect the 3% upfront and be surprised if the Buyers do not ask for them. Also, know that most lenders can not use more than 3% on their loans.

If you have any further questions please let me know!

Good Luck!

Leslie Heldenbrand-Monaco
The Kentwood Company
0 votes
John Keene, Agent, Denver, CO
Mon Nov 15, 2010
Paul,

Seller concessions are part of the negotiation. Buyers who are looking to reduce their out-of-pocket costs might be willing to give you a full price offer if you cover their costs.

Others may pay their own costs but will be looking for a price reduction.

Either way, your bottom line might end up the same.

Is your home currency listed? If not, I would welcome the opportunity to sit down with you and discuss your options.

The above scenarios are also part of the process of setting the asking price and managing expectations when the offers start to come in.

John Keene
303-547-7578
0 votes
Marcia Walla…, Agent, Lees Summit, MO
Mon Nov 15, 2010
Yes, it is very common in a buyer's market to pay the buyer's closing costs.
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Gerard Dunn, Agent, Chevy Chase, MD
Mon Nov 15, 2010
It is.

It has been a buyers market for some time. Paying buyers costs in most markets is common - and is negotiated at contract.

Good Luck!

Gerry Dunn
Associate Broker
Serving Maryland, D.C. and Northern Virginia
301-651-8600 - A few minutes ago
0 votes
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