Assisting a buyer with paying all or part of their closing costs may just be the ticket to getting your home sold—even in a hot market.
Depending on the buyer, they are usually required to put 5% to 10% of the purchase price as a down payment. While you (as a seller) also have closing costs to pay, a buyer’s closing costs can also run into the thousands of dollars. Most buyers usually have the down payment but they struggle with getting the enough money to pay the closing costs.
So how does it work? Let’s say that your home is on the market for $200,000. Buyer closing costs may be $5000. The buyer offers you $190,000 and they decide THEY will pay the closing costs. Or they offer you $195,000 and YOU pay the closing costs. In effect, your bottom line will be the same.
It’s important when selling your home and negotiating the final sales price, that the real estate agent provides you with what is called a “net sheet”. It’s an estimate of the money that you would receive from the sale of your home after paying commission, your closing costs, pro-rating property taxes and the balance of your mortgage. If you decide to pay all or part of the buyers closing costs, that would be deducted from your money too.
First-time homebuyers are usually the ones who need help with paying the closing costs. However, many second-time buyers are selling their homes and have lost a lot of value over the past several years. They may just get enough money for the down payment and may need help with closing costs too.
And, if you are selling your home and buying another one, it’s also an option for you to consider. Sure, the loan amount may be a little higher to cover the closing costs. Only you can decide if it’s worth it to pay a little bit higher payment each month — or come with thousands of more dollars over and above your down payment.
Please let me if you are looking for a real estate to list your home or buy another one!