When a buyer asks for seller to pay closing costs...

Investor · Kearny, NJ · Member since 2016 · 214 posts · 29 votes

When a buyer asks to pay for all closing costs, exactly what would the seller be paying for? And how and why would a seller even agree to such thing? On a duplex of approximately $350,000 in NJ how much would the seller be paying for at closing having this requirement? What about the buyer?

Thank you in advance and I'm sorry for such a lame question. I'm new to real estate and gaining knowledge is my ambition. Thank you for understanding and guiding me in advance!!

1 Reply

30 views

Most Popular Reply

Jeremy S.

Flipper/Rehabber · Mechanicsburg, PA · Member since 2013 · 189 posts · 84 votes

10y

Seller would pay closing cost to keep the out of pocket expenses manageable for the buyer thus making the deal possible. Some of the closing costs are state transfer tax, prepaid mtg interest, prepaid taxes and home owners insurance, title insurance, home inspections.... I can't say for sure what closing cost would be on that duplex but I could guess in the range of 15-20k but there are so many variables. Maximum closing cost assistance is often limited by the type of loan the buyer is using and the LTV

1 Reply

See this reply in the discussion

5 Replies

Jump to latestLatest

Sort by

Jeremy S.
Flipper/Rehabber · Mechanicsburg, PA · Member since 2013 · 189 posts · 84 votes
10y
Seller would pay closing cost to keep the out of pocket expenses manageable for the buyer thus making the deal possible. Some of the closing costs are state transfer tax, prepaid mtg interest, prepaid taxes and home owners insurance, title insurance, home inspections.... I can't say for sure what closing cost would be on that duplex but I could guess in the range of 15-20k but there are so many variables. Maximum closing cost assistance is often limited by the type of loan the buyer is using and the LTV
1 Reply
Carlos Rodrigues
OP
Investor · Kearny, NJ · Member since 2016 · 214 posts · 29 votes
10y
Okay thanks Jeremy S. So if I wanted to purchase a $350k duplex and I don't want to shell out or have additional $15-20k I can try to have the selling pay for it, but it would only increasing my mortgage monthly? Would this be a good strategy if it would only increase my mo/ mortgage by a small amount? Saying the tenants rent would be able to cover the mortgage, taxes etc.. And me being able to hold on to my $15-20k..? Also is there any calculators or formulas I could use to figure out my closing cost? Thanks again everyone!!
0 Reply
Jeremy S.
Flipper/Rehabber · Mechanicsburg, PA · Member since 2013 · 189 posts · 84 votes
10y
It's highly unlikely that rolling your closing costs into the loan would even be possible. It's cash required up front to close and can be difficult to come up with in addition to your down payment, that's the reason why you would ask the seller to assist... Will this be an owner occupied property?
0 Reply
Carlos Rodrigues
OP
Investor · Kearny, NJ · Member since 2016 · 214 posts · 29 votes
10y
Jeremy S. It would be owner occupied with FHA insured loan..
0 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
The amount the seller can pay is limited in most mortgage products and varies by mortgage product. But let's say the property is $350k and you have agreed on that price, but you want the seller to pay $10k in closing costs. So then you restructure the contract to reflect a $360k sales price with a $10k seller subsidy. The sellers net remains essentially the same. (It will actually differ slightly since some costs involved percentages of the sales price)
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.