When you buy a house, you have a lot more to pay for than the down payment. The closing costs alone can cost up to 5% of the loan amount. If you have a $200,000 loan, you may need as much as $10,000 more than your down payment. Sometimes sellers can help you with those closing costs, but how do you make that happen?
If you want your seller to help, you’ll need to give them a good reason to do so. Below are the top ways to make it happen.
BID THE FULL PRICE
Sellers have an asking price for their home, but they never expect to receive it. They price it knowing that they will likely accept a lower price for it. But, if you bid the full price, you may be able to convince the seller to help you with the closing costs.
Because you bid the full price, the seller will walk away with more money than he anticipated. If you ask for a credit at the closing to help with the closing costs, the lender may be willing to do so. If you only need a little help and the seller still walks away with more money in his pocket than he anticipated, you’ll have a better chance of getting the help you need. It all starts with giving the seller what he or she wants – from there the seller may be more willing to work with you to get the sale to the closing table.
DON’T ASK FOR CONTINGENCIES
Many buyers have contingencies or ways out of the contract. While some contingencies are crucial, such as the home inspection, others are more of a nuisance than anything. If you can give the seller as few contingencies as possible, he or she may be willing to work with you to get the loan closed. This could mean helping you with the closing costs if you ask.
While you don’t want to avoid the necessary demands that you need in the home, you don’t want to make yourself look greedy. If you need help with the closing costs, let the seller help you, but don’t also demand that they leave all of the appliances, give you a contingency for the sale of your home, an inspection, and financing too. It’s about give and take – let the seller know you are serious about buying the home and that you want what is best for everyone.
If you have a motivated seller, letting him know that you can close on the home in the next 30 days may entice him to help you with your closing costs. You have to know the seller’s motive, though. Some sellers put their home on the market early, knowing that it will take time to sell it. These sellers won’t care that you can close quickly. Other sellers, however, are in a rush and need to sell their home like yesterday.
If you find a seller that needs to sell quickly and you can accommodate him, he may do whatever is necessary to help you get to the closing table, which includes helping you with closing costs. This is another example of the give and take – you give the seller what he needs and he may help you with what you need.
SPLIT THE COSTS
It helps if you can pay some of the closing costs, this way the seller doesn’t have to foot the whole bill. If you tell the seller that you have half of the closing costs and you need a credit for the other half, it’s like meeting him halfway. He may see it as a compromise and help you. If you go to the seller and tell him that you have nothing saved for closing costs and that you need him to foot the whole bill, you may not have as much luck.
Sellers are often willing to help with the closing costs if you approach the situation correctly. Let the seller know that you are willing to work with him as long as he works with you. Even asking the seller what he needs from the sale in order to help you with your closing costs can help.