In one of my previous articles I wrote about a seller’s concession. A tool used quite frequently by banks to allow the buyer to borrow the money to cover closing costs. The seller is basically permitting the buyer to inflate the loan amount by up to 6% of the purchase price. The difference between the selling price and loan amount is used towards closing costs.
Why does the seller care, they’re still getting their money, you ask? This is a great question…and one that the buyer asks ALL the time. For the buyer the benefit is obvious, however, the seller has to agree because there is a downside to all of this.
Downside 1: If the home does not appraise for the new price, then the buyers will be denied a mortgage and the deal is dead.
Downside 2: In NY State, sellers incur a transfer tax equal to $4/1000. In the example above, there will be an extra $100 expense.
In today’s market, as a seller you must consider all possible scenarios when selling a home. You want to open the market to as many potential buyers as possible versus narrowing your buyer pool to the extremely qualified. Chances are, this may be the best and highest offer on the table. Seller’s concession is only one strategy and it’s completely legal and a common practice in Westchester County. This is especially true for first time home buyers and homes on the lower price range.
Remember, real estate is not simply black or white or yes or no. You have to understand that there is more than one way to put the deal together even with a seller’s concession. Here’s a thought, you can make the deal not contingent on the home appraising for the entire amount. Also, if $100 is a big deal to you, have the buyer pay it.
If this is your box, open it.
