Series - The Home Buying Process Part 5

You're building up some good knowledge so far! Congrats!

In the last post, I mentioned a way we can help creatively structure your offer to reduce your total out-of-pocket expense with something called a Seller Concession.

So what is this anyway?

From our last example, our total closing costs were going to be $18,000 ($10,000 Down Payment + $8,000 Closing Costs).

Let's say for example, you only wanted to pay $15,000 TOTAL. We would need to ask for a $3,000 Seller Concession. And here's how it works:

Instead of offering $200,000 for the house, we would offer $203,000 with $3,000 Seller Concession. The seller will walk away with exactly $200,000 ($203k - $3k = $200k). You will have that $3,000 applied towards your Closing Costs reducing them from $8,000 down to $5,000 ($8k - $3k = $5k) for a total closing payment of $15,000!

But where did that $3,000 go?

We effectively rolled it into the life of the mortgage and financed it! The catch is your mortgage will now be based on a purchase price of $203,000 instead of $200,000 so your monthly payment will go up just slightly. Most people have the income to cover a very small increase in monthly payment but do not have the savings to cover all of the closings costs. Plus! You have furniture to buy, projects to do, etc. and keeping some of that cash in your pocket is important.

In the next conversation we have, I will discuss the various terms that comprise a complete OFFER to Purchase when you are finally ready to negotiate on that perfect house!

This is one of the more complicated processes during your home search and offer period. As we get closer to your purchase we will discuss your terms and decide together if asking for a Seller Concession is going to be right for YOU!

Let me know if you have any questions in the meantime!