Negotiating Who Pays Your Closing Costs

We work with many first time homebuyers and the vast majority ask the seller to pay for some or all of their closing costs.  Sellers are generally fine with paying some of your costs, but they will consider how much it costs them.  Let’s look at an example of how this works:

A home is listed for $150,000.  You offer $145,000 and ask the seller to pay for $5000 of your closing costs.  The seller sees this as a “true” offer of $140,000 since they will not get to keep the $5000 they pay toward your costs.

When you structure your offer, decide what “true” offer price you want the seller to see.  What if the home is perfectly priced at $150,000 and the seller won’t come down at all in price?  You’ll need to offer $155,000 and have the seller pay $5000 in order for your offer to net the seller $150,000.

Before writing an offer, ask your Mortgage Professional how much the seller is allowed to pay toward closing costs & prepaid expenses.

Keep in mind that most loans have restrictions on how much in closing costs the seller is allowed to pay.  They care who pays closing costs because they don’t want the purchase price artificially inflated very much.

Remember, these are your closing costs. Sellers have much higher closing costs of their own and may want a higher price in return for paying yours as well.