Assignment of Contract and Terms - Buyer Pays Closing Costs

2 Replies

Hello All!

I've read material through various resources that buyer pays closing costs as long as it's put in the agreement. 

My questions are... Is this happening in today's market or in your current business model?  When the "we buy ugly houses" people mention they pay all closing costs, are those for certain exit strategies and/or having the potential buyer pay for all? 

I assume for some deals and strategies there's a big enough margin to cover all but I'm curious if there's a rule or something.

I'm a licensed agent and there hasn't been a time where my buyer's have had to bring money to the table, and that's one of their biggest requests. So I feel it's definitely a limiting factor to a sale.

I feel like I'd be narrowing down my possibilities of a successful transaction telling the seller I'll cover it and expect a unrepresented buyer working on their credit to bring a huge EMD, Purchase Option, and/or pay elevated rent. 

My strategies of interest right now are sub-2, lease options with terms and ACTS. I've spoken to a few sellers with enough equity to develop a relationship but some of these FSBOs are smart. Seeing no point in paying me a fee or ability to collect the difference to be an additional resource to get it sold. Now let me add they're more on the "want" to sell side, but still bringing up good questions in which I'd like to have the answer to. 

What are some of your strategies in place for today's market? Every seller I speak to sounds like they just got off the phone with an investor who has read the same book, gone through the same course, and probably listening to the same podcasts. I remember hearing on Ron Legrand's CD all six of them from the interview table said "what competition?" for various understandable reasons, but damn am I seeing some competition. One of my investor client's I'm representing is learning the hard way that the 70% MAO rule is not applicable in my market. Highest and best essentially.

Any and all advice is welcome. Thanks in advance for all your help and wisdom. Now let's get to work!

@Robert Lafrance

I'm not sure if you want to build your own portfolio and buy properties or if you are just trying to get paid commissions. I will answer both ways. As an agent dealing with FSBOs, I believe you should target unadvertised, off market properties that you find through direct marketing efforts. That is where you will find motivated sellers who will be happy to pay a commission if you can help them.

As a buyer, I don't always offer to pay all closing costs, but I will if I think that is the reason the seller is not wanting to accept my offer. The " We Buy Ugly Houses" guys don't offer it all the time either. (I know 4 people that bought franchises with that company). It's just a tool in a negotiation. I'm going to adjust my offer to absorb those closing costs. 

Of course all markets are different dollar amounts and percentages, but I believe if you are marketing steadily, leads will come in and you can buy plenty of deals within your parameters. Consistency is the key.

Happy Investing

Derek Dombeck

@Derek Dombeck  

Hey Derek thanks for the reply! 

To clarify, I'm building my portfolio and "Cash now" retailing properties as an investor. I mentioned my license here as a bit of background experience. When I address FSBOs I'm coming from the investor standpoint to purchase their property through one of the above mentioned strategies.

BUT, if they don't like those options, I can always be put on the back burner for a traditional listing when need be!

Thanks again. 

-To your continued success-

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