Some home buyers are financially qualified and approved for mortgages by their lenders but either don't have the available cash for real estate settlement fees or they would rather use that cash available for home projects than for their closing costs and they wouldn't buy a home if they didn't have money available to personalize the home with some renovations.
In their buyer consultations, real estate agents and lenders explain to their clients that offers on homes can be structured so the seller pays the closing costs at settlement. Depending on jurisdiction and price range, buyers are told to structure their offers so that the sellers are give X% closing cost help at settlement.
Sometimes during negotiations between buyers and sellers, the sales price and seller credit numbers are moved around and the buyer(s) forget to confirm with their lender before signing off on the final terms that all the closing cost help they are due to receive from the sellers can be applied to their purchase. Did you know that any closing cost help from sellers that cannot be used by the buyers at settlement stays with sellers? That is right. You cannot ask/demand that the sellers reduce their sales price to account for the unused money.
Although buyer agents aren't "responsible" if buyers cannot use the entire seller credit, they ought to ask the buyer's lender and/or settlement attorney about the dollar figure and if it will work because the buyers will likely ask their agents why they didn't check into this.
At a recent settlement on one of my listings, the seller credit couldn't completely be used. About $20 couldn't be used in the end, which isn't bad. But it took creativity. For example, the buyer's lender let the buyers pre-pay 12 months of their association fees with some of the seller credit. While it was a shame that the buyers couldn't use everything, I felt a relief that it was such a small amount of money that they seemed calm. It was a smooth transaction. There isn't anything like excitement at the settlement table. It is important for buyers and sellers to see the final closing costs in advance so they are not surprised and if something surprising comes up, it can possibly be resolved.
There is an old saying: measure twice and cut once. That is how I feel about seller credits. Check carefully up front if you are asking for it/negotiating for it in your offer and if you are asking/being offered it based on the home inspection.
Don't leave money on the table.
Whenever you or someone you know is thinking about moving or has a real estate question, I want you to call or email me. I am here to help and always have time for your referrals.Life is good.
Long & Foster Real Estate, Inc..
Licensed in MD & DC
information deemed to be accurate but not guaranteed