The Ins and Outs of Seller and Buyer Credits

Buyers find out very early in the home-buying process that the cost of buying a home goes far beyond just the purchase price of the home. Lender fees, appraisal costs and title fees quickly add up for a buyer.

To help surmount these closing costs, buyers can request a closing cost credit from the seller in their purchase offer.

Fannie Mae will allow a seller credit from 3% to 9% of the purchase price, depending on the amount of the down payment. Buyers who put less than 10% down will be limited to a 3% credit.

Those with at least 25% down will be entitled to a 9% credit. The buyers will often offer the seller more than the asking price to offset the credit.

This is acceptable as long as the house will appraise for the higher negotiated selling price.

Seller closing cost credits may be negotiated after the home is under contract. This would occur if a home inspection called out needed repair work and the seller would rather give the buyer credits in lieu of doing any work.

These kinds of credits work well because it gives the buyer the opportunity to make repairs in the time and manner they chose.

Sellers usually expect to have to negotiate buyer credits for repairs.

Call or email me for a time to meet with your buyers. I will review their financial situation and help determine how much of a closing cost credit is best for them.

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