Should You Ask for Buyer Closing Costs? | Seller Subsidy Tips When Writing Real Estate Contract

Should You Ask for Buyer Closing Costs? | Seller Subsidy Tips When Writing Real Estate Contract

Alright, how’s it going? Matt Leighton, welcome back to another video. In this video, we’re going to be talking about
the seller’s subsidy. Also known as closing cost assistance. Should the seller be helping you with closing
costs? Or better yet, should you be requesting the
seller help you with closing costs? That’s what we’re going to be talking about
in today’s video. I’m here in Arlington, Virginia in my Courthouse
office. You can get a glimpse of it behind me. It is Christmas Eve. When you see this, it will be Christmas morning. So first and foremost, Merry Christmas! Okay, let’s get right into it. Seller Subsidy. Should you be asking for the seller to pay
your closing costs? When you go and close on a property, when
you go to settlement there will be seller side closing costs, there’s also going to
be buyer side closing costs, that as a buyer, you will be responsible for. Now when you’re filling out a contract, you
can ask for a seller subsidy, that is possible. Should you be doing this? I think the answer comes down to your situation. I think there definitely is a possibility
and there definitely is a potential for you to be asking this. It just comes down to how well your offer
is. If it’s a balanced offer. If it’s a clean and clear-cut offer. If you’re competing with other offers and
it’s a multiple offer situation, I probably would not recommend asking for closing cost
assistance. On the other hand, if there’s no other offers
and you think you can get a good deal, I think it might be worth it to go a little under
list price and then ask for a couple thousand dollars for closing. The sellers care about the ‘net’. What they are going to keep. And when you think about that, you have the
gross sales price less the seller subsidy. Less whatever closing costs as a buyer you
are asking for. Think about this scenario. Let’s say a property is on the market for
$400,000. And you write an offer for $395,000. You’d be saving about $5,000, right? Well, think about another scenario where you
offer $400,000 and then you ask for $5,000 back in seller subsidy. It’s still a net of $395,000. It means the exact same for the seller. Where on the other side of the equation, on
your side. If you were to do $395. You get a slightly lower mortgage. Maybe you save a couple dollars per month. But you still have that huge downpayment and
then that closing costs. But in the situation where you go full list
then $5,000 back, your mortgage might be a few dollars higher, it’s nothing drastic. It’s going to be a few dollars higher. And then you immediately save $5,000 from
out-of-pocket expenses. Closing costs can be anywhere from 2% – 5%
of the sales price so these are thousands of dollars and let’s face it, buying a home
is hard enough. Saving up for that down payment is really
difficult and if you have an opportunity to save $5,000 out-of-pocket. Why not take advantage of that? Now some may say, why not just bump the sales
price up $15,000 and then ask for $15,000 back in seller subsidy? Well, that sounds like a good idea. But we have to think about the appraisal. The lender is only going to give you enough
money for however much the property is worth. They’re not going to give you money if you
just artificially increase the sales price so you can get money back. It doesn’t work that way. The appraiser is going to see right throught
that. They’re only going to appraise to what the
property is actually worth. You can’t manipulate the system and try to
increase the sales price and also try to increase that closing costs to help you out on the
back end. Doesn’t work that way. My thoughts on the seller subsidy are this:
if there is an opportunity for you to get money from the seller for closing costs, I
think you should aboslutely take advantage of it. If you’re competiting against other offers,
it’s going to be very difficult unless you start waiving other contingencies. Things like the home inspection, things like
the appraisal and at that point, if you’re waiving the appraisal and you’re asking for
money back, you are walking on thin ice. Maybe it’s your dream home. Maybe you know what you’re doing. But once you start waiving apprisals and waiving
other contingencies you have to think about what’s really most important because you are
putting yourself at risk. With the seller subsidy. There is opportunity if you’re not competiting
with other offers. So maybe on the next property you write on,
try coming in a little bit below the sales price and ask for a few thousand dollars back,
it will really help you out the day of settlement. Alright so thank you so much for watching. If you’re not already subscribed, you can
do so by hitting that red subscribe button down below and I’ll catch you in the next
video. Until next time, create a productive day. Take care.

5 thoughts on “Should You Ask for Buyer Closing Costs? | Seller Subsidy Tips When Writing Real Estate Contract

  1. Hey Matt, great video! Informative, fast-paced, to the point and without all the fluff. Love it. I'm a Realtor up here in Anchorage Alaska just about to launch my channel and came across yours and appreciate your style, just subscribed. If I come across anyone moving to your area I will definitely be sending them your way. Keep up the awesome videos!

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  3. Can you talk about buy a home when using a VA loan.

  4. Very useful stuff. I watched your videos back and forth taking notes. I’m finally closing on Monday. Thank you deeply for such a helpful and educational videos you had post. Greetings from NY.

  5. What about “For Sale by Owner”? I’ve been renting a house for the last three years. Owner wants to sell and I want to buy. No agent. Who has the leverage? Would it be fair to split closing?
    You ROCK btw! Learning a lot from your vids! THANK YOU!!

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