Does it mean on paper it looks like they pay it but in reality it is added to the amount the buyer is loaned? EX: Buyer wants to purchase house for sellers price of 150,000. There are $5000 in closing costs. Seller agrees to pay closing costs so Buyer does not have to have cash and buyer is given a loan for $155000 to the seller.
2007-02-13 05:30:18 · 7 answers · asked by askfortrouble 1 in Business & Finance ➔ Renting & Real Estate
Wow, very interesting...
If the Seller is paying closing costs the costs that are being refered to are the legal fees for conveyancing or transfering the title (which I guess is called escrow in the US?).
The Seller is already paying the commission from the proceeds of the sale as stated in the Listing Agreement UNLESS the Buyers have a REALTOR who is being paid through a Buyers Agency agreement with themselves.
SO in your example if the Buyers offer of $150,000 is accepted by the Sellers the Buyer pays $150,000, pays for the home inspection and other inspections and any ather fees charged by the mortgage company on top of the actual mortgage, pays the adjusted taxes that were paid by the current owner.
The Seller gets the $150,000, pays off their mortgage, pays the Real Estate commission and all legal fees attributed to the transaction..
THIS IS IMPORTANT!
The fact that there are so many different interpretations of this term here in "answers" should alarm you enough that this term "closing costs" needs to be defined in the contract of purchase and sale so that there is no mistake on what is actually being paid.
Don't assume that this term covers what you think it covers - spell it out!
2007-02-13 19:04:28 · answer #1 · answered by glen s 3 · 1⤊ 1⤋
Closing cost are considered in two different categories
#1 Non-recourring
Points paid for securing a loan, fees paid to secure a loan, title insurance, escrow cost and fees.
#2 Recurring
Taxes, Insurance
So if a seller decide to pay the closing cost as an inducement to get a sales completed on his/her house they are selling, they have agreed to pay the above cost.
Normally these closing cost comes from the proceeds paid the seller after all mortgages and other liens, if any are paid.
I have yet see these closing cost rolled into the sales price or have anything to do with the sales price of the property. The sales price of a home is determined by the appraised value. So for the sake of this argument suppose the appraised value comes in at $160,000. The sales price has now been established.
Now if a seller has agreed to pay $5,000 closing cost they can not now add the $5000 to the sales price of the home,making the sales price $165,000.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2007-02-13 05:51:52 · answer #2 · answered by Skip 6 · 0⤊ 1⤋
Every one is right--- The seller accepts your terms in the contract. If That states they pay the closing cost and prepaids and they accept these terms then you come to the table with no$$$ or very little. On the other hand the house may be just over priced by the seller and the agent and you may have had terms of less $$ on the front end. Agent do not tend to want to accept an offer of less $$ on the purchase as it cuts into THEIR commission. That is why if the true fair market value is $140 they will jack it up to 155 just so they get their full commission. The appraiser will almost always bring the home in on the sales amount. let the buyer be ware
2007-02-13 05:43:34 · answer #3 · answered by golferwhoworks 7 · 0⤊ 1⤋
This Site Might Help You.
RE:
If the seller "pays closing costs" what does that mean exactly?
Does it mean on paper it looks like they pay it but in reality it is added to the amount the buyer is loaned? EX: Buyer wants to purchase house for sellers price of 150,000. There are $5000 in closing costs. Seller agrees to pay closing costs so Buyer does not have to have cash and buyer is...
2015-08-07 05:10:54 · answer #4 · answered by Anonymous · 0⤊ 0⤋
What it means to me is that the loan should be for $150,000 and the seller is paying the closing costs out of his net payment. Making the loan for $155,000 immediately pays the seller back the closing costs, which makes the claim a lie. There is another name for including the closing costs in the loan - like "No cash at closing"
2007-02-13 05:36:19 · answer #5 · answered by Mike1942f 7 · 0⤊ 0⤋
No, if the seller is paying closing cost it means that whatever closing costs are associated with the closing of the transaction (actual selling) the seller will pay out of pocket, usually out of profit on the sale of the house. These fees are usually, but not limited to, realtors fees, title fee, title insurance, escrow/attorney fees, recording fees and sometimes inspection fees but not always .The seller, however, is probably not responsible for your loan fees. Those fees are origination fees, document fees (which are a rip off and should be negotiated off of your charges), any points you may pay to get a lower interest rate etc. Those can be rolled into your loan amount if you dont have cash on hand to pay them up front. All of this should be discussed with your mortgage broker or lender.
2007-02-13 05:43:18 · answer #6 · answered by miss m 4 · 1⤊ 0⤋
A majority of the answers are right as well as the person asking the question. The sales price would reflect a higher price due to the closing costs. It is a common practice for cash strapped buyers and eager sellers.
2007-02-13 05:59:47 · answer #7 · answered by tianaramal 4 · 0⤊ 1⤋
You're half right, half wrong.
The wrong part- your loan will only be for 150k.
The right part- the closing costs are actually coming out of your pocket, because the seller could offer a lower price, like 145k, if he/she wasn't offering to pay the closing costs.
2007-02-13 05:35:26 · answer #8 · answered by Cardinal Rule 3 · 0⤊ 0⤋
It means the seller will pay the 5,000 closing fee. Simple as that.
2007-02-13 05:49:48 · answer #9 · answered by devilgal031948 4 · 1⤊ 0⤋