Getting a Seller to Contribute to Buyer Closing Costs

avatarthumbnail.jpgThe question asked on Trulia Voices …

“In today’s market, how flexible are sellers to pick up 3% of the closing costs?”

Short answer is it depends on the seller. Most contracts these days include some sort of seller assistance for the buyer, whether it’s a request to cover the buyers’ closing costs (usually 3% or so in Arizona) or to also help with the down payment (through a third party non-profit such as Ameridream, at least until such programs goes away October 1 barring saving legislation from Congress.)

Whether such a contract is successful depends on a few different factors, most prominent of which are the sellers’ equity position and their motivation. If the sellers lack the equity to cover the buyers’ closing costs, then clearly it’s not a possibility. And if the sellers aren’t willing to take a chunk out of their proceeds to help the buyer, the sale won’t happen.

Requests for assistance from the seller usually succeed most often with offers a little closer to the list price, assuming the list price is based in market reality. In essence by offering the seller a little more than you otherwise might, you’re financing your own closing costs as part of the loan.

Combining 3% seller acceptance (or more) with a lowball offer, say more than 10% below the current asking price and/or market value, usually don’t succeed unless the seller is in a must-sell situation. There’s no harm in asking, unless you really, really want that one particular property because you’re often starting negotiations in a highly adversarial position. There’s a decided difference between being strong and belligerent.

Lastly, seller assistance also varies depending on the current market conditions. A couple of years ago it never would happen. These days, it’s remarkably common.

[tags]Phoenix real estate, real estate negotiations[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at

1 Comment

  • Upstart Agent 9 years ago

    I think as long as the offer is solid (within a few thousand of the asking price) asking for a seller concession is usually no big deal – especially since many agents will reduce the commission to the concession price instead of the sales price. But as you said, if you offer a lowball offer AND ask for the seller concession, chances are your offer will be rejected.

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