Whether sellers pay is completely dependent on your local market. Our first town, sellers always pay; you no pay, you no sell. We moved 40 miles away and it was unheard of for sellers to pay; buyers didn't ask bc it meant you "couldn't afford" a house and your offer would be rejected out of hand for fear of your financing falling through. Completely depends on custom. Ask/trust your agent.
buyers didn't ask bc it meant you "couldn't afford" a house and your offer would be rejected out of hand for fear of your financing falling through.
This was our area. We were in a very tight market and offered over asking to include closing costs and lost because there was a stronger offer. Luckily that offer backed out and we got our house. They still walked away with asking
Post by mrs.jacinthe on Mar 16, 2013 0:15:10 GMT -5
Its not customary here, but we went for it and they accepted. But the house had been on the market for almost two years and I think they just wanted rid of it.
This topic makes me irrationally angry. The seller is already paying the realtor commissions and closing costs are the costs associated with BUYING a house. Why should the seller pay that? And to be able to use some of the sellers money to pay for part of a point on YOUR loan? Seriously? Where does this stop? Should you ask the seller to pay for your moving costs too? Or if the closing is 60 days and you wanted 30 days, do you ask the seller to pay storage costs or your next months rent?
Frankly, if you can't afford to pay closing costs, you seriously shouldn't be buying a house. Not everyone is entitled to own a house. I know this may not be a popular opinion, but like I said, the topic makes me irrationally angry.
I think it really does depend upon where you live.
On a personal level, I tend to agree with penguinsrus... where does it end? Sellers already pay out so much when selling their house. I think along the lines of "if you can't afford closing costs, can you afford a house?" In my area, it can go either way but it's definetly not expected of the seller to pay.
This topic makes me irrationally angry. The seller is already paying the realtor commissions and closing costs are the costs associated with BUYING a house. Why should the seller pay that? And to be able to use some of the sellers money to pay for part of a point on YOUR loan? Seriously? Where does this stop? Should you ask the seller to pay for your moving costs too? Or if the closing is 60 days and you wanted 30 days, do you ask the seller to pay storage costs or your next months rent?
Frankly, if you can't afford to pay closing costs, you seriously shouldn't be buying a house. Not everyone is entitled to own a house. I know this may not be a popular opinion, but like I said, the topic makes me irrationally angry.
I see your point, but nobody is holding a gun to the sellers head, so they can turn the request down. I they had turned our request down for closing costs of $4,500 we would have paid less for the house by $4,500. This is how it has been explained to me by many realtors. We used the excess for a point because it was allowed. I agree it seems a bit off, but they contractually agreed to closing costs up to $4,500 and if we didn't use the excess, we would have lost it and paid/financed more than we should have.
From the sellers point of view, they can accept an offer at $204,500 and pay closing costs of $4,500 or accept the offer as $200,000 and the buyer pays closing costs. It's the same answer either way.
No need to jump down my throat about using closing costs toward my point. The sellers were able to make their own sound judgement as to whether they wanted to accept the offer. If I had returned the excess over closing costs than used it toward a point, then I would have paid/financed more for the house than the agreed upon price really.
TBH I think sellers are irrational in many cases because they are pissed the market sucks and don't like the fact that its a "buyers market". It's a big shift and nobody wants to accept that they made poor investments. I was told early in my career that houses are not good short term investments by a beloved mentor/CPA. I'm sure glad I listened to him and waited I out or else I would be stuck with an FHA mortgage and underwater on a house now.
Yes, how dare sellers refuse to shell out more than the THOUSANDS of dollars they are already paying to sell their home. What irrational jerks.
I voted no, as that was the case when we bought our current house in June.
Our previous house, bought in July 08, the bank (it was a foreclosure) did pay most of closing, which really surprised us. We paid a little toward closing when we sold, but not nearly half and we got it back as a month rent-free in the house after closing while we waited for our new house to close and then moved.
Both houses are in northern VA, about 2 miles apart, so same area, but the market changed around us.
Yes, how dare sellers refuse to shell out more than the THOUSANDS of dollars they are already paying to sell their home. What irrational jerks.
Cost of selling your house. You don't like it, don't sell. It's not the buyers problem that the seller made a bad investment. If the seller isn't willing to sell at market conditions, someone else will.
This will always be an argument because a buyer will always see it differently than a seller.
Clearly you've never sold a house. The cost of selling your house is to pay the realtor commissions, not to pay closing costs and a point for a buyer whose credit rating sucks and/or doesn't have the discipline to save for a down payment to avoid PMI in a market where the selling price of the house fluctuates based on the agreement to pay closing costs.
Not all sellers made bad investments by buying their house. I know I certainly didn't. Purchasing a house at market value is not making a bad investment, even if the market tanks. It's no different than purchasing stock and the stock market crashes. No one can predict that.
In my mind a bad investment is purchasing something that I can't afford OR purchasing a house without an adequate down payment so I throw away money on a monthly basis by paying PMI.
We just bought - the sellers paid closing costs, but it wasn't something we asked for. It was advertised as such (and no, they didn't budge much off the cost of the house which was to be expected since they paid the closing costs).
We also just sold, at a huge loss. Thank HEAVENS we got a 100% cash offer so we didn't have any closing costs to even mess with so it was never an issue! Just had to pay realtor fees + what we owed on the house.
Clearly you've never sold a house. The cost of selling your house is to pay the realtor commissions, not to pay closing costs and a point for a buyer whose credit rating sucks and/or doesn't have the discipline to save for a down payment to avoid PMI in a market where the selling price of the house fluctuates based on the agreement to pay closing costs.
Not all sellers made bad investments by buying their house. I know I certainly didn't. Purchasing a house at market value is not making a bad investment, even if the market tanks. It's no different than purchasing stock and the stock market crashes. No one can predict that.
In my mind a bad investment is purchasing something that I can't afford OR purchasing a house without an adequate down payment so I throw away money on a monthly basis by paying PMI.
Yeah clearly you don't understand what I've explained about the way it works. My sellers were going to get the same amount whether we paid the closing costs or they did. The difference rolls into my loan.
Also. Back the fuck off on personally going after the credit score and having enough of a down payment. Not the case. You are making assumptions.
I'm out.
*drops mic*
Dude, relax. Your original post indicated you put enough of a down payment down to avoid PMI. So, how is the down payment comment directed at you? I used the example of using closing costs paid by the seller to pay for a point, that's the closest it got to you personally.
The only thing directed at you was in regards to your assumption that all sellers made bad investments.
Yes, how dare sellers refuse to shell out more than the THOUSANDS of dollars they are already paying to sell their home. What irrational jerks.
Cost of selling your house. You don't like it, don't sell. It's not the buyers problem that the seller made a bad investment. If the seller isn't willing to sell at market conditions, someone else will.
This will always be an argument because a buyer will always see it differently than a seller.
Yah, I don't get the outrage sailor. Either you accept the offer or not- if you think you will get a better offer by all means walk. Either pay their closing costs or sell the house for less, who cares?
We made an offer with sellers paying 3k of closing costs. We are happy to basically finance 3k of closing costs at 3.5%.
When we first made an offer on a house for below what they sellers were asking, I got quite a bit of outrage on here about how I was being unfair to the sellers to want to get a deal, and I should make a "fair" offer. Well F that! I don't care about being fair to the sellers, I care about getting the house for as little as possible! If they think they can get better elsewhere, they are welcome to try.
Post by SusanBAnthony on Mar 16, 2013 15:42:28 GMT -5
Ramz-ee I most certainly have sold a house, for a lovely 100k loss in fact. Guess what,mi didn't care whether I sold the dang thing for 200k plus 3k closing costs assistance or 197k. What in the world difference does it make? The buyers offered whatever they thought it was worth, I countered what I thought it was worth, we either agree and make a deal or we don't and I hold it for something better. Why does paying closing costs matter at all, just look at your bottom line and take it or leave it!
Also. Back the fuck off on personally going after the credit score and having enough of a down payment. Not the case. You are making assumptions.
Yes, please stop assuming that all buyers who ask for closing costs are dead beats. Some of us live in places where cost of a house makes it pretty much impossible to save 20% while paying rent. It doesn't mean we're stupid or lack financial discipline. It sucks that we'll have to pay PMI for a few years, but we CAN afford our house.
Ramz-ee I most certainly have sold a house, for a lovely 100k loss in fact. Guess what,mi didn't care whether I sold the dang thing for 200k plus 3k closing costs assistance or 197k. What in the world difference does it make? The buyers offered whatever they thought it was worth, I countered what I thought it was worth, we either agree and make a deal or we don't and I hold it for something better. Why does paying closing costs matter at all, just look at your bottom line and take it or leave it!
I would look at the bottom line and take it or leave it, but not everyone understands that paying or not paying closing costs factor into the final price of the house. There are plenty of buyers out there who think they can negotiate the price of the house and then also get closing costs. They don't see it as one transaction. And that's where I have the issue with it.
And to your other post, of course you should get the best deal possible. I totally agree with that and if the seller agrees to paying the closing costs, that's an even better deal for you. As a buyer, I would rather have a lower loan amount for a variety of reasons including believing closing costs are the buyers responsibility.
Yeah clearly you don't understand what I've explained about the way it works. My sellers were going to get the same amount whether we paid the closing costs or they did. The difference rolls into my loan.
What you are describing is not the norm everywhere. If our buyers had said that they'd just offer less if we weren't willing to pay for closing, we would have told them to take a hike. The price of a house is based upon comps, and having the seller pay them is a bonus. It is not the norm at all to take closing costs into consideration when determining what one should offer. If anything, it sounds like a move that an unsaavy first time buyer would make.
Yes, please stop assuming that all buyers who ask for closing costs are dead beats. Some of us live in places where cost of a house makes it pretty much impossible to save 20% while paying rent. It doesn't mean we're stupid or lack financial discipline. It sucks that we'll have to pay PMI for a few years, but we CAN afford our house.
I have no doubt that is the situation for some people, but I can't say whether you are the majority or not. I hope I'm wrong and that you are the majority, but we didn't have a housing crisis because everyone who purchased a house could afford it.
Ramz-ee I most certainly have sold a house, for a lovely 100k loss in fact. Guess what,mi didn't care whether I sold the dang thing for 200k plus 3k closing costs assistance or 197k. What in the world difference does it make? The buyers offered whatever they thought it was worth, I countered what I thought it was worth, we either agree and make a deal or we don't and I hold it for something better. Why does paying closing costs matter at all, just look at your bottom line and take it or leave it!
This. This is what's being forgotten in this post. It doesn't matter - the net to the seller is the same. Who cares what you call it?
I think, with the exception of maybe TBM, and of course SJH who does it for a living, we've bought and sold more real estate than anyone else on this board. We've made money; we've lost money. Some places sellers pay CCs (and I should certainly hope their agent is telling them to cushion their listing price for negotiating room...and CCs are part of the negotiation), and some places buyers pay. The net is that a house will only sell for what it's worth - what pocket or pile that money comes out of is irrelevant. If the buyers are offering too low, tell them to hit the road; otherwise, the net they're offering is fair market value.
And for the record, we always ask for CCs. Not because we can't afford them or because we don't have the credit (wanna play a game of whose paycheck or credit report or retirement savings is prettier? I didn't think so, so stop ASSuming), but because we just feel like it's a "waste" to put down thousands in liquid cash if someone else will do it for us. Getting the other guy to pay as much as possible is Business 101...and yes, I may hurt your feelings in the process, but I've been on both sides of the table, and that's how financial transactions work.
Yes, please stop assuming that all buyers who ask for closing costs are dead beats. Some of us live in places where cost of a house makes it pretty much impossible to save 20% while paying rent. It doesn't mean we're stupid or lack financial discipline. It sucks that we'll have to pay PMI for a few years, but we CAN afford our house.
I have no doubt that is the situation for some people, but I can't say whether you are the majority or not. I hope I'm wrong and that you are the majority, but we didn't have a housing crisis because everyone who purchased a house could afford it.
I don't know why you think asking for closing costs means you can't afford the house. Lots of people (including us) would rather just mortgage a few thousand extra and keep a few thousand more liquid, especially with mortgage interest rates so low. FWIW, our sellers rejected our request for closing costs and we bought the house anyway.
Post by darkling_glory on Mar 16, 2013 16:37:21 GMT -5
We're currently in the process of buying a home and when we negotiated the price we asked for and received closing costs. 3k to be exact, which should be most, if not all of the CC.
Both my husband I have Credit Scores of over 800 and we're putting 10% down - conventional. I think it's just common in our area.
And for the record, we always ask for CCs. Not because we can't afford them or because we don't have the credit (wanna play a game of whose paycheck or credit report or retirement savings is prettier? I didn't think so, so stop ASSuming), but because we just feel like it's a "waste" to put down thousands in liquid cash if someone else will do it for us. Getting the other guy to pay as much as possible is Business 101...and yes, I may hurt your feelings in the process, but I've been on both sides of the table, and that's how financial transactions work.
And you are ASSuming that everyone is like you and has good credit or a pretty paycheck.
And for the record, we always ask for CCs. Not because we can't afford them or because we don't have the credit (wanna play a game of whose paycheck or credit report or retirement savings is prettier? I didn't think so, so stop ASSuming), but because we just feel like it's a "waste" to put down thousands in liquid cash if someone else will do it for us. Getting the other guy to pay as much as possible is Business 101...and yes, I may hurt your feelings in the process, but I've been on both sides of the table, and that's how financial transactions work.
And you are ASSuming that everyone is like you and has good credit or a pretty paycheck.
I get that you're riled up, so that's why I really think you should take a break for a while, but your original point was a sweeping declaration that if you asked for them, you didn't deserve to own a house; mine was refuting that.
"Frankly, if you can't afford to pay closing costs, you seriously shouldn't be buying a house. Not everyone is entitled to own a house. I know this may not be a popular opinion, but like I said, the topic makes me irrationally angry."
"not to pay closing costs and a point for a buyer whose credit rating sucks and/or doesn't have the discipline to save for a down payment to avoid PMI in a market where the selling price of the house fluctuates based on the agreement to pay closing costs."
And you are ASSuming that everyone is like you and has good credit or a pretty paycheck.
I get that you're riled up, so that's why I really think you should take a break for a while, but your original point was a sweeping declaration that if you asked for them, you didn't deserve to own a house; mine was refuting that.
"Frankly, if you can't afford to pay closing costs, you seriously shouldn't be buying a house. Not everyone is entitled to own a house. I know this may not be a popular opinion, but like I said, the topic makes me irrationally angry."
"not to pay closing costs and a point for a buyer whose credit rating sucks and/or doesn't have the discipline to save for a down payment to avoid PMI in a market where the selling price of the house fluctuates based on the agreement to pay closing costs."
I'm not actually riled up. But this did get out of hand. My original statement was that if you "can't afford to pay closing costs, you seriously shouldn't be buying a house." That was my point, the "can't afford" it part, not if you ask for closing costs you shouldn't buy a house. My experience has been that people who ask for closing costs, can't afford them. Did my statement assume everyone who asks for closing costs was in that situation, yes. Based on everyone's responses, that was a bad assumption, but again, all of you can't assume just because you can afford them that everyone can.
My personal belief is that it's the buyers responsibility to pay closing costs. Period. But if you get the sellers to pay your closing costs, more power to you.
Cost of selling your house. You don't like it, don't sell. It's not the buyers problem that the seller made a bad investment. If the seller isn't willing to sell at market conditions, someone else will.
This will always be an argument because a buyer will always see it differently than a seller.
Yah, I don't get the outrage sailor. Either you accept the offer or not- if you think you will get a better offer by all means walk. Either pay their closing costs or sell the house for less, who cares?
We made an offer with sellers paying 3k of closing costs. We are happy to basically finance 3k of closing costs at 3.5%.
When we first made an offer on a house for below what they sellers were asking, I got quite a bit of outrage on here about how I was being unfair to the sellers to want to get a deal, and I should make a "fair" offer. Well F that! I don't care about being fair to the sellers, I care about getting the house for as little as possible! If they think they can get better elsewhere, they are welcome to try.
No outrage. I think it's great when a seller is willing to pay closing costs.
What I put in bold in Merida's comment makes absolutely no sense. When all is said and done, we will be shelling out $20k to pay agents and cc on our house if we were to sell. This is on a $220k house. Where is that not paying for the cost of selling our home? Paying CC is a great incentive, but I live in a market where incentives are not needed. Merida is obviously not speaking for all markets. Also, not everyone sees buying a home as an investment. We did not buy our home to make money, but we sure as hell won't lose money on it if we don't have to.
Post by mrs.jacinthe on Mar 16, 2013 18:24:49 GMT -5
Well, this has turned into a lively discussion. My $0.02/personal anecdote (because that's what will clearly solve the debate -ha!):
Closing costs are definitely designed to be the buyers responsibility, at least initially. I also agree that there are a number of those buyers who ask for closing costs because they don't have the liquidity. However, it is foolish to group all buyers who meet ANY set of contract "possibilities" into a predetermined can-or-can't afford it scenario, whether they are responsible or irresponsible. Because its not the sellers job to determine if the buyer can afford it, its the bank's job. As a seller, my job is to make the most money on the sale I can, or at least lose the least amount of money. As a buyer, my job is to bring the least amount of money into the deal that I possibly can. That's what the negotiation process is for - to help both the buyer and the seller walk away happy, or at least content. If contentment can't happen, then the deal doesn't.
For example, on paper, we look exactly like the kind of buyers you were describing as "cannot afford a house": we were an FHA loan, put down the bare minimum required by FHA, asked for the maximum allowable in closing costs, AND made an offer substantially below asking. Sounds like we couldn't afford it, right?
However, our monthly payment now is $300/month LESS than we were paying in our rental, which was, literally, 3x smaller than this house. The amount we were paying in rent made it nearly impossible to save any money for a down payment, beyond what we already had. As well, we had to bring money to the table to offload our house in Ohio - partially because our buyer had a VA loan, which REQUIRES seller-paid closing costs. The cost of real estate out here (particularly compared to the cost of renting) means that a 20% down payment , especially for first time or COL transplants like us, is unrealistic. Additionally, its an old house with lots of renos required and our offer/requests reflected that, since we wanted to do some repairs right away and needed the cash liquidity.
So, all that to say, what bothers me about the earlier posts were the sweeping generalizations ... every situation is different, and its important to respect that in a forum scenario like this,IMO.
Post by sailorgray on Mar 16, 2013 18:37:37 GMT -5
I just wanted to add that I will always ask for CC and never expect to get them. I will also not be mad at seller and their refusal would not make me walk. Also, I don't consider upping your price so that the seller brings cash to the table and you rolling that cash into your loan as the seller paying cc. If a buyer came to us with that offer, maybe we would go for it. I count seller paying CC as they pay cash out of their pocket and that's it. They are out the money. Oh, and I don't think people asking for CC are deadbeats with bad credit who can't afford to buy a house or whatever.
I do remember when people were doing the 80/20 loans and walking when the sellers wouldn't pay cc. Now I do not think THEY should have been buying a house.
My MIL was our realtor. When we bought our house, she never even suggested to us to ask the seller to pay the closing costs, so we split them. I didn't even know it was a thing. But then when we went to sell the house that we were living in, somehow she talked the buyers into a deal where we paid $12k towards closing. So we really got a shitty deal on both sides. Thanks, MIL.
My MIL was our realtor. When we bought our house, she never even suggested to us to ask the seller to pay the closing costs, so we split them. I didn't even know it was a thing. But then when we went to sell the house that we were living in, somehow she talked the buyers into a deal where we paid $12k towards closing. So we really got a shitty deal on both sides. Thanks, MIL.
Aw, man, I would be so ticked. Did you ever say anything to her? We used a family friend of H's when buying our home and realized that he really did not have our best interests in mind. We thought going with him would give be more beneficial over going with some random agent. He didn't cause us to lose money, though. I would be pretty livid.