How a Seller is affected by paying a Buyers closing costs

While ironing out some details on a contract for some real estate in Florence, Alabama, the sellers had a question about how assisting the buyers with their closing costs would affect their bottom line.  If you're a seller then that's what's important; what you're going to walk away with at closing. Well, let me explain how you, the seller, can open up your home to an additional set of buyers and how it affects your bottom line.

In today's market there isn't as many buyers with a surplus of cash in the bank to apply towards their dream of home ownership. Therefore, sellers need to be creative in order to reach this group of buyers and stay ahead of their competition. Here's an example of how this works.

Say you have your home on the market and you're asking $250,000. A buyer comes along and offers you your asking price but wants you to pay $10,000 in closing cost. Do you net $240,000 or less? Less! Some sellers have thought that this $10,000 includes their closing cost as well. Not true! In this example the sellers should first add their costs associated with the sell while ignoring the $10,000 figure. This is what the sellers net would look like. For this example we assume that the real estate taxes are $1,500 and are paid in arrears. We're also assuming we close six months into the tax year.

         Brokerage Fee of 6%                   $15,000
         Title Insurance                                     725
         Title Search                                          125
         Deed Preparation                                  50
         Closing Company                                350
         Release of Mortgage                              50
         Prorated Taxes (1500 / 12 * 6)            750

                                     Total                   $17,050

         Buyers Closing Costs                    $10,000

                             New Total                   $27,050

        Sellers Net Proceeds                     $222,950

This is just one example of many how your bottom line can be affected while selling your home. There's so many ways to offer incentives and open the doors to these kinds of buyers yet still net what you need.

One other common thing is that sellers have had buyers add their closing costs to the offer in order to finance the buyers closing costs into the loan.  Be sure and ask your lender what the max amount a seller can pay in buyers closing cost because it varies with lenders and programs.  It's something every seller should consider in today's real estate market.

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If you're considering selling your home give us a call and we'll talk about all the ways we can help you get what you need in the sale of your home without shutting this door of opportunity. Bobo Real Estate Company has been helping buyers and sellers in the Florence, AL area since the 1950s. Whether buying or selling, call us! It doesn't cost it pays!

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