Updated: Jan 7
Buying or selling a home is a multi-step process that can be confusing without an experienced real estate agent on your side. Your real estate agent will be available to answer questions along the way, but it is important that you have a basic understanding of the steps involved before you decide to purchase a home. Your agent’s expertise is not a replacement for doing your own research.
Like with any complex legal transaction, there are many boxes that need to be checked before you can finalize the sale of a home. There are several fees associated with closing on a home. These fees include licensing fees, loan origination fees, appraisal fees, title searches and insurance, and other smaller costs that can add up to be a sizable sum. Taken together, these hidden costs and fees are commonly referred to as closing costs.
It is important that new buyers realize the costs involved with taking out a mortgage. These fees can often eat up a significant portion of the funds that you have allocated towards your down payment. Fortunately, the buyer is not always responsible for the full amount of these costs.
In some cases, the seller will agree to cover some or all of these fees in order to help finalize the sale. In this case, the agreed upon arrangement is referred to as the seller concessions.
These costs can be split between the buyer and the seller in several different ways. In some cases, the seller will agree to pay most or all of the closing costs in order to sweeten the deal. This is particularly common if the seller is in a hurry to sell the home or if the home has been sitting on the market for several months without receiving a decent offer.
In other cases, the seller will not agree to seller concessions. This is common if the seller has received more than one good offer. In this case, the seller does not need to incentivize the buyer to seal the deal. For this reason, a buyer should always be prepared to pay all closing costs. It is not unheard of for a sale to fall through because the buyer did not have enough cash available to cover all of the closing costs. You should talk to your lender ahead of time to find out your options for covering the closing costs yourself.
Seller concessions can be a useful tool for both buyers and sellers to leverage, but you will need to have a general understanding of the concept to know when you should and should not agree to pay closing costs. It is important that buyers and sellers both understand the steps involved in a successful real estate transaction. Understanding the nuances of each step can help you to be better prepared to close on a home. To learn more about the intricacies of buying and selling a home, contact one of our team members today.