First conventional sale. Buyer requesting seller credit for closing costs.

Member since 2021 · 20 posts · 8 votes

Hi all. My sister is looking to put in an offer on a property in Chicago, first time homebuyer, cosigning with my mother, they have a pre approval letter. I am a new agent and this is my first conventional sale/transaction. Buyer is willing to pay asking price but was wondering if seller could pay for some of the closings costs. What is the norm for buyer to request? The reason I am asking this on BP and not my sponsoring broker is because he is unreachable a few days. I wanted to get a head start. What, if any, is the average credit requested by the buyer? Any guidance would be greatly appreciated.

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Kenny Smith

Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes

@jorge leon

You could also ask your sister's lender or the title company, ballpark, how much closing would be on that property. This will give you the amount to ask for in concessions. Or, if you want to do that yourself, typically they are around 1-1.5% of the purchase price. I am here in CO though, so not sure how that differs in IL.

Lastly, in our contract to buy and sell real estate here in CO, there is an option in the contract of who pays what with regards to closing costs. The buyer or seller, or a combination of both. You could always check those boxes that the seller pays ALL closing costs and you should be good to go. But again, this would come in the form of a concession, so as others attested to, just need to make sure you aren't going over the allowable amount dependent on how much down payment she is doing.

Hope this helps. Best of luck!

PS, don't take this the wrong way, but as a new agent, you should be working for a brokerage that has mentors or accessibility to a managing broker when you need them. I've been in your shoes before, and that is not good to have to wait a couple of days to hear back from your broker. You're going to have a million questions in the beginning, and that will make things even harder when you can't get access to the people that should be helping you. I work for eXp Realty, and their mentorship program and accessibility to managing brokers is AWESOME. It has helped me tremendously.

Shoot me a DM if you're looking to learn more about eXp. Can't say enough good things about their system and support.

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Brittany MinocchiBusiness Member
Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
3y
Depends on how much the buyer is putting down, allowable seller concessions are between 3-9% on a conventional loan.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
3y
@Jorge Leon For conventional….with less than 10% down payment, the max is 3%. 10-25% down, max 6%. Over 25% down, max 9%.
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Paul De Luca
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
3y
Quote from @Jorge Leon:

Hi all. My sister is looking to put in an offer on a property in Chicago, first time homebuyer, cosigning with my mother, they have a pre approval letter. I am a new agent and this is my first conventional sale/transaction. Buyer is willing to pay asking price but was wondering if seller could pay for some of the closings costs. What is the norm for buyer to request? The reason I am asking this on BP and not my sponsoring broker is because he is unreachable a few days. I wanted to get a head start. What, if any, is the average credit requested by the buyer? Any guidance would be greatly appreciated.

As long as the seller gets the net sale price they are looking for, they shouldn't care about giving a seller credit. I usually recommend to my clients to request a credit between $5k-$10k, depending on the purchase price and actual closing costs. You should confirm the max seller credit amount the buyer can get with the lender.
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Kenny Smith
Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes
3y
@jorge leon
You could also ask your sister's lender or the title company, ballpark, how much closing would be on that property.  This will give you the amount to ask for in concessions. Or, if you want to do that yourself, typically they are around 1-1.5% of the purchase price. I am here in CO though, so not sure how that differs in IL.
Lastly, in our contract to buy and sell real estate here in CO, there is an option in the contract of who pays what with regards to closing costs. The buyer or seller, or a combination of both.  You could always check those boxes that the seller pays ALL closing costs and you should be good to go. But again, this would come in the form of a concession, so as others attested to, just need to make sure you aren't going over the allowable amount dependent on how much down payment she is doing.
Hope this helps. Best of luck!
PS, don't take this the wrong way, but as a new agent, you should be working for a brokerage that has mentors or accessibility to a managing broker when you need them. I've been in your shoes before, and that is not good to have to wait a couple of days to hear back from your broker.  You're going to have a million questions in the beginning, and that will make things even harder when you can't get access to the people that should be helping you. I work for eXp Realty, and their mentorship program and accessibility to managing brokers is AWESOME. It has helped me tremendously.
Shoot me a DM if you're looking to learn more about eXp. Can't say enough good things about their system and support.
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Eudith VacioPro Member
Real Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes
3y
Hey @Jorge Leon 👋🏽
congratulations on your first deal with a family member! have you called the listing agent to inquire if there have been any offers on the property & check what the seller is looking for? If your sister really wants it, she might not have the option of negotiating concession upfront. Right now, the market is extremely competitive and there are still multiple offer situations happening. I usually try negotiating concession post inspection, if you can. Also, if you don't mind me asking 😃 what brokerage are you with?
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
3y
@Jorge Leon I list properties regularly, so I deal with this on a day-to-day basis. Credits are currently the norm in the Chicago area, especially in the entry level areas where first time buyers would be purchasing. I would yet to meet a seller who is excited to hear about a credit, but they are necessary in our current market to get deals done 9 times out of 10.
This is a constantly changing dynamic, and you as an agent will eventually get the feel of it as you work in your areas over time. Just a year or two back, credits were not very common on most transactions as there were multiple offers. Going back five or six years, credits were super common as it was more of a buyers' market.
BTW, your managing broker or someone in the office should be there for you when you have questions like this.
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Jonathan KlemmBusiness Member
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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
3y
Hey @Jorge Leon - What type of financing does your buyer have?
For FHA loans, seller concessions are limited to 6% of the purchase price of the home and cannot be applied to your down payment.
Is the property in Chicago Proper?
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Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
3y
Quote from @Jorge Leon:

Hi all. My sister is looking to put in an offer on a property in Chicago, first time homebuyer, cosigning with my mother, they have a pre approval letter. I am a new agent and this is my first conventional sale/transaction. Buyer is willing to pay asking price but was wondering if seller could pay for some of the closings costs. What is the norm for buyer to request? The reason I am asking this on BP and not my sponsoring broker is because he is unreachable a few days. I wanted to get a head start. What, if any, is the average credit requested by the buyer? Any guidance would be greatly appreciated.

I'm answering this on the 7th day of your post so you've probably already figured it out. The average seller credit depends on location, location, location. If you are an agent and have access to Remine, you can run a CMA in the area that your sister is considering & find out the average credit that sellers are willing to provide.
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