​​Karen Summers Realtor
​​​                             When Results Matter

The Colony Homes Specialist​

[email protected].com​​
Paying Buyers Closing Costs

So you have decided to sell your home?  Whatever your reason for selling -  moving to another state or country, needing a bigger home or perhaps, downsizing because the kids are no longer home, your ultimate goal is to sell in the shortest possible time at the highest obtainable price.  To do this, you need a plan.

The best thing to do is to consult with a real estate expert who is able to give you the advice you need so you can realize your goal.  The first thing you need to know is the value of your property; information an experienced realtor familiar with your neighborhood can provide.   This way you can price your house at or near market value while making sure that you have some wiggle room for negotiations.

You need to be realistic enough to know that practically all offers will be lower than your asking price and some buyers may ask you to pay 3% of the closing costs.

Closing Costs …  Should You or Should You Not?

As a seller, are you compelled to pay the buyer’s closing costs?  

This is an oft-asked question.  And the answer would be “NO, you are absolutely not required to.”  BUT you might find offering to make a concession toward closing costs would actually be a good strategy when selling your home.

Understanding Closing Costs

Before deciding on whether to agree to pay a buyer’s closing costs or not, it is important to understand what exactly these costs are. When a buyer purchases a property, he is charged a set of fees that include:

  • property appraisal
  • title search
  • title insurance
  • loan origination
  • attorney’s fees
  • other costs paid out to transfer ownership of the home and when taking out a mortgage.

From the very nature of these costs, it is really not the seller’s responsibility to shoulder these. However, though offering to pay these appears counterintuitive, it could actually be beneficial for you as the seller. Often, buyers offer a higher price, in exchange for the rebate.

Benefits of Shouldering the Closing Costs

You Attract More Potential Buyers.  Buyers are normally required to make a fairly large down payment for the property.  If a buyer is a short on cash, paying for both the down payment, as well as the closing costs, might not be affordable at the time of purchase.  Offering concessions toward closing costs can attract even buyers who may just have enough funds only for the down payment to purchase the property.  And you have a larger buyer pool, which is always a good thing when selling a property.

You Increase Your Chances of Making a Faster Sale.  Keep in mind that your goal is to sell in the shortest possible time at the most obtainable price.  Staying inflexible about paying buyer closing costs could cause interested buyers to just walk away simply because they could not afford both down payment and closing costs.  If this keeps happening, the process of selling could hit a snag and slow down. You would not want to have your property sitting for a long time especially if you have already bought another one.  You could find yourself still paying for your present home while already paying for its replacement.  

You May Have Buyers Paying a Higher Price For Your Property.
 Often, when you are a more flexible seller, buyers become more reciprocal by putting in a higher offer to take into account the closing costs that you pay for.  It is a win win situation.  It becomes possible for a buyer who may have great credit but does not have great savings to purchase your home.  In turn, you are able to sell your home in the shortest possible at a higher price.

Consider the Local Market

Let me clarify that while offering to pay for buyer’s closing cost can be a good thing for sellers, one still needs to also look at the real estate market in the area to determine if it is a wise financial decision to do so.

If the area where your home is situated is in a sluggish market, offering concessions towards buyers closing costs might be the best strategy in having your property sell faster.  Not being able to recognize this might even cost you thousands of dollars as your house sits longer and longer on the market.  

On the other hand, if your home is in a “hot” area where prices are rising, inventory of homes is low and competition for homes is high, picking up buyer’s closing costs could be crazy and foolhardy and totally unnecessary.

If you are considering selling your home and need help on maximizing the potential of your property, reach out to me today. 

Tags: closing costs, home buyers, home sellers, home buying, buying a house, buying property, selling property, home sales, real estate expert,  appraisal, title insurance
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