SELLER CONCESSIONS or LOWER SALES PRICE?

Question

The Seller is not being asked to bring a separate check to closing to pay the Buyer’s Closing Costs. This is a very common, simple Paper Credit at closing.

Keep in mind, if a seller is willing to discount the price even one dollar, then they’d just as easily be willing to give that same discount as a credit towards paying the buyer’s closing costs as they still net the same. (NOTE: unless it's currently a rental, then, if the seller is savvy, will need to adjust for seller's CAP GAINS difference)

Meet Reserve Requirements

Loan programs require a certain amount of reserves (money in the bank after closing).With more reserves, borrowers can qualify for more loan program options

Money available to Pay Off Debt

Borrowers will have more money available to pay off debt if needed to qualify

Reach a lower LTV (Loan To Value)

Borrowers will have more money available to put down to lower the LTV to qualify for more loan program options or to meet DTI (Debt To Income) ratio requirements

Money available for Rate Reduction

Buyer will have more money available to buy down the rate if required to qualify.

Help Neighborhood Home Values

Sellers in the neighborhood can use Borrower’s higher sales price as a new comparable sale to list and their home at an even higher price, helping to increase neighborhood’s home values (i.e. Appreciation)

What else can I add to this list of benefits?

Account Closed · Answer

It works in bigger markets too, its just few realtors make offers the correct way and hate to take good advice from a Mortgage Broker.

If the borrower / buyer is instructed to take the common sense preliminary steps in advance, it can work almost every time.

1. Get "Legitimately" Pre-Approved and obtain a solid Qualification Letter in advance for HIGHER than the list price. (DO NOT POOR MOUTH THE OFFER WHEN ASKING FOR SELLER CONCESSIONS)

2. Deposit a substantial amount of Good Faith money in escrow with a Title Attorney and obtain an Escrow Letter in advance

3. Do NOT make the initial offer with seller concessions, wait for the counter offer, then restructure the offer with Seller Concessions AND add another $2,000 or more in good faith money with the counter offer.

4. if the seller is worried about the buyers not having enough money, simply explain to them that they want to have money left over in reserves for repairs and upgrades...or the borrowers don't want to cash in stocks due to penalties (THIS IS A NO BRAINER EXPLANATION THAT MAKES SENSE) and/or be ready to send them proof of funds.

I'm telling you, this strategy works like a charm! But the fight is almost always getting close minded realtors, whose negotiating skills are weaker than circus cool-aide, to think Outside the Box.

My realtor partners, who I refer my pre-approved buyers to, are instructed to do as a advise on my referrals and this strategy WORKS!

Account Closed · Answer

Well obviously the appraisal has to come in at the sales price, but you are missing the whole concept.

Of course this won't work in all situations, but on properties that a buyer's agent finds and does a CMA and the value is there, to not structure this way is a missed opportunity!

But to argue with realtors over this no brainer strategy is like arguing with them over who pays the Real Estate Commission.

Question: if a buyer negotiates their lowest sales price, and the buyer's agent were to back out of the deal, thus allowing the seller to lower the sales price another 3%, then who is actually paying the buyer's agent real estate commission?

Answer: The Buyer, in the form of Forfeited Home Equity in the form of higher price for property to pay the buyer's agent

True or not?

Jack V. Ospina · Answer

I recently helped a few clients purchase SFR as first time home buyers and we received seller concessions for each deal. About $5,000 each deal. I love this concept but it does not always work. Some sellers have the impression the buyer is barely making it and will be hesitant to take the home off the market for that particular buyer. This strategy works in smaller markets. I think you will need a savvy realtor who knows how to present this type of offer.

> SELLER CONCESSIONS or LOWER SALES PRICE?

> SELLER CONCESSIONS or LOWER SALES PRICE?

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