Maximum sellers assist?

Question

Is there a maximum amount a seller can assist towards closing costs on an investment cash purchase?  I understand the percentages when using a mortgage.

Bill B. · Answer

It affects skin in the game...

Property is $100k and I don’t have a $ to my name.

So I tell seller I’ll pay $110k with $10k in closing assistance.

Maybe I put 3% down on the new 110k sales price and the loan is now for 7% more than the real sales price

Or maybe $120k with $10k in closing and $10k in cash for me.

Why is closing assistance allowed at all?

Just lower the sale price the amount of the “assistance” it’s all about allowing people who can’t afford to buy a house a way in  especially if they don’t really have the 3% downpayment

.

Russell Brazil · Answer

2%

DJ M. · Answer

I think you guys missed the "cash purchase" part. Either that or I am the one who is missing something. :)

Wayne Brooks · Answer

@Eric Armstrong Well then,that would purely be up to your private/ hard money lender.  HML’s will probably allow less since they want you to have some skin in the game.  For a true private lender, friends or family, it would depend on how dumb they are.

Lien Vuong · Answer

I don't understand, you're buying the property in cash but also want seller to assist with closing costs, why dont you just reduce the price? With financing I understand the incentive bc it is amortized over 25/30 years so it's cheap money but not in the cash instance.

Wayne Brooks · Answer

@Eric Armstrong Well then your question was wrong....you asked about a Cash Purchase, no loan.

The max seller assist is 3% on conventional financing and 6% on fha financing.  But note, You can Not use the seller assist for your actual down payment, you have to show that in cash before your loan is approved.  The seller assist can only be used for “closing cost” and you can Not get cash back.

Russell Brazil · Answer

I did miss the cash part....so Wayne is absolutely right. Seller assist plays no part in a cash offer.

Rick Pozos · Answer

Or how much they trust you. My lenders dont care how much the seller contributes. They are lending me all the purchase and most if not all the repairs. I usually get cash back at closing, sometimes all of the rehab money at closing.

This is of course people who I know personally and they know I am not going to go out and spend the money on a new car and then get foreclosed on. Friends with IRAs are the best to borrown from. There must be plenty of trust on both sides.

Eric Armstrong · Answer

@Lien Vuong good point.  I rephrased the question below.

Eric Armstrong · Answer

Let me rephrase.   Purchase with private/hard money. The less I have to borrow the better. I’d like to use as much of the private/ hard money for purchase and rehab. My original thought was a mortgage lender will only permit a certain percentage where as a private/hard lender wouldn’t matter. Sorry for confusion.

Maximum sellers assist?

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