Closing Costs Paid By The Seller – Posted by Alex Lopez on Monday, March 14, 2022 at 11:33 By Alex Lopez / March 14, 2022 Comment
When you buy a home in the Lehigh Valley, you are not only responsible for the listing price of the property. You’ll also need to budget for other costs associated with the home buying process, such as a home inspection, title search, brokerage fees, and don’t forget the down payment. But another often overlooked set of costs that comes with a bit of sticker shock are closing costs.
Closing Costs Paid By The Seller
As a buyer, you should understand how closing costs are calculated and get estimates ahead of time to prepare. And when closing costs can range from $5,000 to $20,000, it’s a big change to arrange payment.
How To Calculate Closing Costs On A Nc Home / Real Estate
What many buyers don’t realize, however, especially first-time buyers, is that there are ways to avoid these high out-of-pocket closing costs. In some scenarios, you can even get the seller to pay the closing costs if you know how to navigate the process. Here’s what every Lehigh Valley home buyer needs to know about closing costs and how to get sellers to pay them.
What are closing costs anyway? Usually paid by the buyer, these costs are charged by lenders as payment for creating and processing your home loan. This lump sum, payable at closing, represents expenses associated with title searches and property appraisals. Average closing costs and requirements will vary from country to country, but are typically between 3% and 6% of the list price range. The type of mortgage and home loan you get will also affect your total closing cost.
Closing costs, which can often be anywhere from $3,000 to $6,000 per second, are not included in any down payment you already have in savings. But closing costs are negotiable. And we’ll have the benefit of vendor concessions here in a little while. As a best practice, it’s always a good idea for homebuyers to prepare for these closing costs in advance, in addition to the down payment, in case no seller concessions are available.
If you are a first-time home buyer, closing costs may be rolled into your loan. Conventional loans probably won’t allow this. However, FHA loans and VA loans have provisions to help finance closing costs. There are also first-timer grants available, designed to help with the upfront costs associated with purchasing Lehigh Valley property.
How To Ask A Home Seller To Pay A Closing Cost Credit
When you hear your agent or lender talk about seller concessions, they are usually referring to any costs that the home seller may agree to pay as part of the process of selling their property. Generally, seller concessions represent a percentage or all of the closing costs or other expenses. Some sellers may agree to pay transfer taxes. Others may agree to cover half of the closing costs.
As a buyer, it’s important to remember that seller concessions are compensation, not a gift. Sellers won’t pay your closing costs without getting something in return. Your lender can help you better understand the nuances of home buying numbers so you know what to negotiate when you can take advantage of seller concessions.
Again, sellers won’t be giving away concessions for free. And there are ways to ask your deal sellers to consider concessions. Here’s what Lehigh Valley home buyers should know.
Making a lower or lower offer will not help you with the seller’s concessions. Instead, consider paying full price for the property, asking the sellers to help offset closing costs. Be reasonable with your ask and know that the best way to get what you want is to also offer something the sellers will want, such as the full asking price.
Editable Closing Cost Guide Editable Or Instant Download Pdf
It’s best not to ask the seller for concessions if you don’t at least have your ducks in a row. Sellers will be more willing to work with you if you’re ready to close immediately, asking for extensions or more time to get the paperwork in order. Have all your pre-approvals in place and be ready to schedule quick inspections. This means to the seller that you are serious and motivated, even apart from your application for a seller’s concession to help with closing costs.
If it’s a seller’s market, meaning there’s a line of buyers right behind you looking at a listing, asking for concessions from sellers may not work in your favor. It’s not necessarily doing the sellers any favors by accepting closing costs. And when other offers are on the table, demanding concessions can work against you. To find out what scenario you’re in with your sellers, talk to your real estate agent who can guide you on what is and isn’t an acceptable question at this time, based on your current market.
If you’re primarily looking to your sellers to cover closing costs, avoid making other demands that could hurt the deal. For example, if there are repairs or conditions that didn’t go well during home inspections, it’s reasonable to ask the sellers to offset those repair costs or make repairs themselves. But asking for repairs and closing costs may be too much to ask, depending on the situation. Let your knowledgeable real estate agent guide you through the negotiation process to ensure you are asking for the most reasonable seller concessions with the best chance of covering your closing costs.
If you’re buying a home for $250,000, with 3% closing costs, or $7,500, be open to partial closing cost sales concessions. Since you are basically asking the sellers to do you a favor, don’t get greedy or over the top. Be flexible and negotiable, even with closing costs. Getting $3,500 out of that $7,500 bill is better than having to come up with $7,500 on your own.
Title Tip: Avoid Costly Mistakes And Learn To Read A Seller’s Closing Statement
Your timing is important when trying to get sellers to cover your closing costs. And there are certain circumstances where asking for vendor concessions makes more sense. Here are a few scenarios that could apply to you right now that warrant a proper consultation to ask your sellers for help with closing costs.
If you’re concerned about cutting back financially, especially considering all the other out-of-pocket costs you have to buy your home, asking the seller for concessions makes sense. Your reason could be to avoid being cash poor
If you’ve gotten pre-approved before you start your home search, you’ll have price limits and budgets to stick to. It may make sense to ask for concessions from the seller to help you stay within these pre-approval limits.
Seller concessions can make sense when a home’s listing price is already reasonable. Because making sellers pay closing costs can, in turn, increase your mortgage amount, it can also affect your loan, interest and down payment. Adding closing costs to the purchase price, as a sellers concession, should be within the value of the home, which is best accomplished when the listing price is reasonable.
Lender Credit And Sellers Concessions For Closing Costs
A common denominator in each of these seller concession situations is having the right guides to help you through your home buying journey. An experienced real estate professional, for example, can help you navigate the market and negotiations with your best interest in mind. Knowing what to ask for and when to ask for it can improve your chances of getting a seller to pay your closing costs.
If you need a Lehigh Valley partner, let Homeway Real Estate be your guide. Our team of professionals can help you find your dream home and every step that comes after!
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The Buyers Guide To Closing Costs
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