Understanding Seller's Assistance

I get asked to explain how seller’s assistance works all the time and have recently been in heated conversations about it… so I thought it would be helpful to clear the air on how exactly it works. Before I get there though, I wanted to share a girlfriendsguide2 fun fact that really just amazed me. I was looking through the statistics on my views and found I have small audiences in India, Iran and Vietnam. This is kind of funny because I focus on local residential Real Estate, but hey, here’s to you my international (girl)friends! I hope you enjoy! J

Ok back to business, seller assist in my opinion, is a very useful and creative financing tool for today’s buyers. It has bunches of applications. Most common would be if a buyer is approved for a mortgage but doesn’t have enough money to cover all of their closing costs or simply would like to conserve some after sale funds then they can ask for seller’s assistance in their price negotiations. Typically a buyer will offer a little higher on the asking price to make it cost effective for the seller. The mortgage is based on the purchase price and at settlement a portion of the seller’s proceeds will be applied towards the buyers’ closing costs. Of course this needs to be approved through a mortgage professional before starting negotiations but it is a pretty common practice in today’s real estate world.

Every once in a while I come across a seller who is not thrilled about the idea of assisting the buyers to purchase their home. I hear things like “When I bought this home I saved to put 20% down and covered my own closing costs. Why would the new buyers expect me to help pay their closing costs” and “I wouldn’t even be able to give that much money to my own children why would I give it to strangers?” Very valid concerns indeed. The way I see it is to focus on the bottom line. If the offer with the seller’s assist factored in meets your financial goals and the home appraises for the purchase price then you’re in pretty good shape. If you are lucky enough to get two similar offers, one with assist and one without, then by all means consider the more financially stable buyer. In other words, sometimes it’s just how you look at things.

There are tons of unique situations and scenarios associated with every real estate transaction. The road to buying and selling can sometimes be frustrating. In today’s climate my best advice is to make the absolute best with what you’ve got and don’t sweat the small stuff!