Back HomeHow to convince the seller to pay for closing costs
There’s more to buying a home than just the purchase price. When you buy a house for sale, you also have to be prepared for other home buying expenses like lender fees, home inspection costs, title services, and property taxes.
But if you’re feeling overwhelmed with all the expenses, there’s a way to help reduce the cost at closing: Asking the seller to pay for your closing costs. Through seller concessions, the home becomes more affordable and you are given a little more breathing room.
What are seller concessions?
As the sale of the home is finalized, the buyer is typically required to pay certain fees up front. These closing costs, which is around 3% to 6% of the home’s purchase price, includes title insurance fees, property taxes, appraisal fees, and escrow fees.
To lighten the financial burden of these up front expenses, a buyer can ask the seller to shoulder the cost. Sellers who agree to pay for the buyer’s closing costs either focus on a specific closing cost or cover a portion of the total cost. Keep in mind that the seller is just covering your closing costs for the time being. Instead of having to pay for it upfront, it will now be included in your mortgage loan.
The amount covered by the seller also depends on your loan type. For conventional loans, the limit is contingent on the down payment. Sellers can only cover up to 3% of the closing costs if the down payment is less than 10%. Conversely, if the down payment amount is more than 25% of the home’s purchase price, the seller can give up to 9%. For FHA loans and VA loans, the concession limits are 6% and 4% of the purchase price, respectively.
Tips for negotiating seller concessions
Negotiating for seller concessions can be tricky. To get the best deal, it’s important to be prepared and know the strategies that will get the seller to go along with your offer. Here are a few helpful tips and tricks that will set you up for a successful negotiation:
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Understand the current real estate market
The success of your negotiation for seller concessions relies on the current real estate market. If you’re in a seller’s market, for example, then it may be more challenging to negotiate since the market is in their favor. A buyer’s market, on the other hand, is more favorable because sellers are more likely to agree.
It also helps to learn more about the seller and their motivation for selling. If the home has been sitting on the market for too long or if they’re in a hurry to let go of the house, the seller may be more open to negotiating.
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Offer the full asking price
Since you’re already asking the seller to cover the closing costs, it makes sense to pay the full asking price of the home. Making a fair offer shows the seller that you are serious about buying the home.
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Avoid making too much demands
Sellers are also more open to granting seller concessions if the buyer’s demands aren’t exorbitant. While necessary repairs are a given, cosmetic demands may make the seller reconsider your offer. As you negotiate with the seller, just focus on having the structural issues fixed first.
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Be open to negotiating
Successful negotiations involve both parties meeting in the middle. If the seller seems unsure about covering the closing costs, there are other concessions that they may agree to such as a smaller down payment, lower earnest money deposit, or a reduction on the home’s purchase price.
Some sellers may also agree to shoulder your closing costs if the home can be closed right away. In cases like these, it’s important to be prepared with your pre-approval letter and down payment amount.
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Work with a real estate agent
The key to negotiating seller concessions is to have a real estate agent by your side. A real estate agent is crucial in negotiating for the best deal possible. And no one knows the local real estate market better. When you work with a real estate agent, you have a representative who handles all the communication and negotiation aspects for you.
Get the best deal by working with the experienced and knowledgeable real estate agents from Berkshire Hathaway HomeServices Caliber Realty. This award-winning team offers high-quality real estate services and in-depth residential real estate knowledge of Texas’ Brazos Valley.
Start looking at Texas real estate listings with Berkshire Hathaway HomeServices Caliber Realty. Call 979.694.8844 or send a message here.
