Wednesday, July 15, 2015
Free Money? Not Really--The True Story of Seller Paid Closing Costs
It is a very exciting day! You've just met with your loan officer and are pre-approved for your first home loan. You are ready to start shopping! You are certain you have enough money in the bank for your down payment. After all, your loan officer said, the seller will pay your closing costs, so you're covered right?
Well, not so fast! It's not like sellers are handing out free money. So what's real story?
When a home buyer writes up an offer for a home, they can ASK the seller to pay closing costs up to a certain percentage allowed by the loan program. But the seller does not have to agree. If they do agree, it is like asking the seller to reduce their price.
For example, if a buyer writes an offer of $200,000 on a home listed for $200,000 and requests the seller contribute $5000 to their closing costs, it is not a full priced offer. The seller will only get $195,000 for the sale.
This is very important for a first time home buyer to understand when negotiating a home purchase. Starter homes in the Minneapolis/St Paul area are being snapped up very quickly. Most homes listed under $200,000 will have multiple offers shortly after hitting the market. If in a multiple offer situation, you need to write an offer that is attractive to the seller. Sellers do not want to give away money to you or anyone else. However, sellers do pay reasonable closing costs for buyers all of the time. It is all part of the negotiations.
Need More Tips on How to Write an Offer on YOUR First Home? Let me help! If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of Boardman Realty, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District. Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.
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