Q: My mother just received an offer on her home that has her paying for the buyers´ closing costs. What is up with that? The buyers are qualified but I think they are trying to take advantage of her.
- T. B., Costa Mesa
A: Many offers we see coming through our office today ask for the seller to pay the closing costs on behalf of the buyer.
This is not unusual and works out the same for the seller in terms of net proceeds in their pocket as long as you do a few things to protect yourself.
You want to limit the amount of closing costs that you, the seller, are willing to pay for.
Put a cap on the amount, for example $20,000. And if, for example, you want to sell your home for $750,000, you would counter back to your buyer at a price of $770,000 and agree to pay $20,000 of buyer´s closing costs ? $770,000 minus $20,000 equals your goal of $750,000.
In reality, you are not paying your buyer´s costs; the buyer is getting a larger loan and is, in fact, financing his closing costs.
You want to make it clear to the agents involved that you are paying the sales commission on the net price of the home at $750,000, which we all understand as agents as being the norm.
It will cost you just a few dollars more in your own closing costs to structure a transaction this way. But escrow and title will most often take into account the $20,000 you are crediting and give the price break at the net amount, which truly leaves you with just the transfer fee of an extra $20 ? a small price to pay to have your home sold to a qualified buyer.
