Two terms you hear with home closing costs, seller closing costs and seller concessions. What is the difference?
Find the best info on the sellers portion of these costs below.
If you are not pre-approved for a mortgage yet, you may want to see if you're eligible for a home mortgage and get an estimate of your closing costs.
It may appear like a tug of war between these two terms, but actually they work together. Read on to learn how.
Remember these are just a few of the possible fees. There may be more depending on where you live and those involved in the transaction.
Now sellers concessions is an entirely different matter. Basically these are concessions that the seller pays and can be a set dollar figure or a percentage. You the seller agree to contribute this figure or percentage toward the closing costs for the buyer. So these concessions can also become part of the sellers closing costs.
Only certain loan programs will allow this opportunity. Why would you the seller agree to such an arrangement? What if the sellers home has some problem or needs updates, the seller can offer a concession by lowering the sale price of the home instead of actually making the repairs.
Another reason the seller may agree to concession is to help finalize the deal. Many home buyers need assistance and agreeing to this kind of help can polish off the deal. Or, by being in a buyers market, can make the deal look more lucrative to the buyer.
Both the seller and the buyer benefit from such concessions. How? You can probably see the benefit to the buyer in upfront costs to purchase the home are lower and some of these costs may even be tax deductible. But the seller benefits in having their home sold more quickly which allows them to proceed to the closing of their next home sooner!
So as you can see, sellers closing costs and sellers concessions are very different. They should not be mixed up as being the same thing. These costs the seller pays are fees involved in the sale of the property and are necessary.
Whereas, seller concessions are dependent on the loan product the buyer may be using and whether the seller will agree to them or not. It is true that a concession can either make or break a deal. So you, the seller, will have to evaluate if it is worth it to you or not.
If you do decide on allowing a concession, keep in mind that to you, the seller, it may not make any difference whether you offer a monetary concession or just lower the sale price. Both lowers the amount you receive at closing. But it may make a big difference to the buyer. The buyer may not like lowering the sale price because it reduces the overall property values for the area. So the buyer may prefer a monetary concession. But that is all negotiable!
So don't let those sellers closing costs affect you. They are part of those necessary mortgage closing costs so you can finalize the sale of your home.
So have you found a home? Are you thinking about getting qualified for a mortgage? Maybe you want to visit our page on how to qualify for a mortgage.
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