How to present buyers with paying closing cost

Question

Hey Everyone,

I have a question regarding how would I present to the end buyer that for the deal to close he/she would have to be responsible for closing cost? Please shed some light on this subject for me. Thanks in advance!

Pat L. · Answer

Fully Document everything upfront.

But depending on the people you are dealing with there are no guarantees. We had one we were selling ourselves.

We made it clear that they pay all closing costs & we would cover the usual : our transfer tax, updated survey etc.

The guys wife then asked ME to write up the sales contract??? I told her she should do it with her attorney & she balked. But she also wanted me to add $8,000 in sellers concessions to the agreed price so they could finance same as they were only going in with 3.5% down. This is when I discovered they were working with a mortgage broker who was ill-advising them for an origination fee of $3,500 !!!.

After several weeks of frustrating back & forth we quit negotiating & just rented it out again. They bought a smaller home for a lot more money & when I checked with the County clerk the financing was definitely $8k more than the recorded sale price. Plus by the time it closed they got nailed with the new improved PMI (that just keeps on sucking).

Our place was completely rehabbed, but the buyers sister (our steak house waitress) informed us that they have since pumped $20k+ into rehabbing the new abode.

Seth Williams · Answer

@Wesley  Merriweather - I would probably mention this specifically in your cover letter (if you're using one) AND in your purchase agreement. For example, in the section on "Closing Costs" you could say something like this:

(a) Buyer will pay for any escrow fees, attorney fees, title insurance, taxes, and recording fees for the Property.

(b) Seller will pay for any liens or judgments against the Property.

(c) This sale will be closed by a reputable title company or attorney.

Obviously, you can tailor it to say whatever you want (i.e. - if you know of a specific cost that you want either the buyer or seller to pay for), but the example above assumes that the buyer would be paying for all of the typical closing costs in the transaction.

Wesley Merriweather · Answer

Thanks Chris, Good Info!

Wesley Merriweather · Answer

Absolutely John, Is it best to include that cost in the offer price to the buyer?

Chris Piper · Answer

Whenever I am selling a property, I let everyone know what my price is, and let them know that they have to pay closing costs. Try to make it known up-front so a deal doesn't fall through of a couple thousand dollars. If you have no other buyers and are running out of time and might lose the deal over the closing costs, then if you can afford to absorb the closing costs yourself, I would suggest doing so. Only if you absolutely have to of course.

Jon Holdman · Answer

Buyers always have closing costs.  You shouldn't need to persent anything on that topic.

Do you, perhaps, mean the buyer is expected to pay costs the seller would normally pay?

Account Closed · Answer

The seller and buyer will have closing cost.

Joe Gore