$30,000 Closing cost for buyer!?

Question

I live in california and recently listed a home for sell asking price
at $495,000. (we want to sell it at $485,000) I have an offer for $505,000 but buyer want $30,000 for closing cost, so the actual selling price is $475,000 ($10,000 less then what we want) Here is the catch, Because my agent also represent both the buyer and seller (act as dual agent, which is legal in california) he will reduce his % commision to 3% instead of 5% as in our contract, so instead of selling for $485,000 and pay no closing cost to the buyer and pay $25,000 (5%) to my agent, so my net final is $460,000. or now we are selling for $505,000 with $30,000 closing cost to the buyer and pay $15,500 (3%) to my agent (because he agree to reduce his commision) my net final is also $460,000. I just want to know if we should accept to pay $30,000 to buyer + 3% to a agent would be a good deal?

Answer 1

Sometimes buyers ask sellers to help with closing costs; I sort of lost track of your deal, but the point is to help cover the closing cost, not just give them money.

That said, if you are making more than $250,000 profit (not sale price, but profit - what you sell for minus what you got it for and/or improvements), that extra $30,000, if you build it into the sale price, will count as income and you'll have to pay taxes on it.

If you aren't making that much profit, then it doesn't matter as much, although it will affect things like the tax stamp and such.

Answer 2

I liked the TJ's answer, I didn't think about the capital gains tax issues. Also, by including $30K in the selling price, the real estate agent makes more money. If the sales price was $475K, the agent commission is $14,250, instead of $15,500.

Answer 3

The buyer is essentially using borrowed money to lower their interest rate and payment (They are paying points to buy down the interest rate). It might be the only way they can qualify for the loan.

If you are walking away with the same amount of money it shouldn't matter to you what the buyer does as long as they close on the home.

Answer 4

If your net is the same, what difference does it make to you how the deal is structured?
T J's point about possible capital gains is the only potential issue I see here. If the "extra" $30K doesn't affect your Homeowner's Exemption (assuming you qualify in the first place) it looks like a
win-win.

Answer 5

I would ask for a detailed list of the closing costs that total $30,000.