Gainesville, FL · Member since 2013 · 127 posts · 21 votes
The buyer wanted me to pay her closing costs up to a certain percentage. I said no, so her agent said, "OK, we'll roll the closing costs into the buyer's loan." They then presented an offer in which the buyer (1) raised the purchase price by the amount of the closing costs and then (2) required me to pay those closing costs. After paying those closing costs I will net the original purchase price, but the drawback is that the higher purchase price raises the commission I will pay to the buyer's agent. Why did they do this? Why didn't the buyer just add the closing costs to her loan and leave the original purchase price where it was? Was it done in order to raise the buyer's agent's commission?
Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
5y
Because banks operate off purchase price for loans. They normally won’t let you do purchase price plus closing cost. So you bake the closing close into the purchase price. That then allows the bank to let you borrow a percentage of the purchase price, and you have little or no out of pocket cost in terms of cash needed at closing.
You can A) have your agent adjust the commission to resolve the cost to you, B) have the buyer issue you credit. Normally the buyers agent is willing to go with option A, as it’s their client that made the offer.