[Video] Why would I pay closing costs for a buyer?

As the market shifts from a seller’s market back to a more balanced market - or even a buyer’s market at some point, it’s important to know what to expect when it comes to purchase offers you may receive on your Oklahoma City metro home. Sometimes sellers are presented with an offer for their home that includes paying certain costs on behalf of the buyer. The initial reaction of some sellers is "Why would I pay the costs for the buyer?" Let’s take a look at what these costs are and why you might consider paying them. Buyer closing costs include their lending fees, title insurance, appraisal costs. For a buyer using a government loan like an FHA or VA loan, the fees can add up to around 3% or more of the sales price of the home. Let’s face it. Many home buyers today, especially those just starting out, don’t have a lot of extra cash laying around. In most cases, they are using what they have to cover their down payment. In order to be able to buy the home, they are counting on the seller to absorb some of their additional costs. Depending on the price of the home and the amount of the fees, the sales price can usually be increased to offset the buyer’s closing costs. This, of course, assumes that the home will still appraise for the agreed upon final sales price.

So, isn’t the buyer actually just financing their closing costs if they do this? The answer is “yes.” When the sales price is adjusted to account for the closing costs, the seller isn’t really “paying them” per se. The contract says they are, but the buyer is really just rolling their fees into the cost of the house. Much like car dealerships “pay” for your tag, title, and tax when you buy a car. We all know it’s simply rolled into the price of the vehicle.

This is NOT always possible. And NOT all buyers ask for their costs to be covered by the seller. Your agent will explain any offers you receive and help you determine the best possible outcome and negotiation strategy to maximize your net. The goal should be to come to a win-win arrangement that meets both the buyer AND the seller’s goals.

Be sure to ask your agent to go over with you the estimated NET proceeds for each offer, along with the itemized expenses involved.

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Click HERE to learn why not all real estate transactions are exactly the same.