What Closing Costs Can the Seller Pay?
Many buyers (particularly first-time buyers) are short the cash they need for the down payment and closing costs. One way to overcome this cash shortage is for the seller to pay a portion of the closing costs. How much the seller is allowed to contribute depends on the type of mortgage loan.
Asking the Seller to Pay a Portion or All of Closing Costs
The seller's willingness to contribute to closing costs is often driven by market conditions and the way in which the request is made to the seller.
As your real estate agency, we will help you prepare an offer that balances the purchase price and request for closing cost assistance with the dynamics of the current marketplace. For instance, in a seller's market we may increase the offered purchase price to offset the request for closing cost assistance.
Remember - When you ask the buyer to pay a portion or all of your closing costs, in essence you are financing the closing costs. This is because the seller's contribution is typically offset by a higher purchase price. And it is this higher purchase price that is financed with your mortgage loan.