There seems to be a misconception, where sellers give back closing costs to the buyers without it affecting the buyers...or sellers. How wrong can this notion be?
I've been working with a few first time home buyers this year, that feel the sellers will gladly hand over thousands of dollars for them to purchase their home. When in actuality they are doing NO SUCH THING.
For all buyers out there thinking that sellers have extra money to *donate* to the purchase of their home, please take off your rose colored glasses.
The sellers are not giving you a dime...ever. When it comes to writing up a contract you (the buyer) are offering a certain price for a home, with the understanding that a a portion of that asking price is for closing costs. This amount just gets wrapped up in your mortgage.
When asking for the closing costs back, it is letting the seller know that you don't have the money to close but instead want to wrap it up in your mortgage. Once again, the sellers are not giving you anything. You are just presenting more for the property and will be paying this full amount off with interest.
For instance, if a home/condo is selling for $150,000 and you offer $145,000 with $5,000 for closing costs, the seller is looking at the purchase price of $140,000 home, you need the $5,000 for the closing costs. They are not giving you any money, you are wrapping up an extra cost in your mortgage, which of course you will also be paying interest on.
Wrapping closing costs up in an offer is not easy anymore either, especially if you are looking to have the deal work. Why? If a home is going for (again) $150,000, and the buyer really wants the property and offers $155,000 with $5,000 for closing costs, the seller will like this, but will the bank? With the decrease in properties, it might not appraise out at $155,000. With most buyers looking for a deal, this *closing cost* factor is not giving you an upper hand.
On the other hand should the buyer be looking to negoiate by offering $145,000k for this home with $5,000 for closing. The seller is looking instantly at a $10,000 reduction.. NOT $5,000. Then on top of this, the seller is thinking I still need to pay out approx 7% to 8% fees on this $140,000. Your mortgage might be approved by the bank, but it might not even make it to this stage of the process.
If the seller owes $135,000 on their mortgage, and the buyer is offers $145,000 with closing costs, this deal will NOT work, you are causing the sellers to be upside down in this deal, and they won't take the offer. So, buyers beware... wrapping up closing costs is NOT always the best route.
FOR ACCURATE INFORMATION ON REAL ESTATE... CONTACT YOUR LOCAL AGENT
Info about the author:
Valerie Osterhoudt is a Cromwell Connecticut Residential Realtor who can assist you with the purchase and/or sale of real estate in the Middlesex County of CT, which includes Cromwell, Rocky Hill, Berlin, Middletown, Wethersfield, Newington, as well as all other surrounding areas. Please visit me at www.CTrealtorMLS.com for all your relocation and/or local needs.
For real estate.. all you need to know, is VALERIEO
If you're thinking about buying a home in Cromwell CT area, there are plenty of great buys in today's market. There is no better time than now to take advantage of these homes while interest rates remain at an all time low. For more information on Cromwell CT real estate's homes and/or condos please visit Johnson Real Estate to access the newest listings.
Valerie Osterhoudt, ABR - Johnson Real Estate, Inc. - 860.883.8889 cell - valerierealtor@sbcglobal.net
Copyright © 2010 - By Valerie Osterhoudt, ABR - All rights reserved...... *** MISCONCEPTION... SELLERS DON'T * GIVE* BUYERS CLOSING COSTS***
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Valerie Osterhoudt, ABR
(Accredited Buyers Representative)
Is a Full Time Realtor® with with Johnson Real Estate, in Cromwell, CT who specializes in Homes and Condos For Sale in the Middlesex and Hartford Counties in CT.
Valerie Osterhoudt, ABR ~Johnson Real Estate, Inc.
cell: 860.883.8889
email: Valerie Osterhoudt, ABR
website: www.CTrealtorMLS.com
