This periodic sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty. Please submit follow-up questions in the comments section or via email.
Question: My fiance and are planning to purchase a home in Arlington this fall and are wondering if we can expect the sellers to pay all the closing costs?
Let me start with some basics. When closing on the sale of a home, the buyers and sellers each have their own set of closing costs that they are required to pay for. In some circumstances, a buyer will negotiate to have the seller subsidize a credit towards the buyer’s side of closing costs. You may want to check out my recent ARLnow article for tips on calculating your closing costs.
Sellers are primarily concerned about the net value of the contract they are considering rather than whether it includes a closing cost concession or not. If the value of the contract is $500,000… they make the same amount of money whether you pay $500,000 and cover your own closing costs or if you pay $510,000 and ask for them to subsidize $10,000 of your closing costs.
The question becomes whether asking for a closing costs subsidy is the best strategy for you.
A ramification of asking for a closing cost subsidy is that by artificially inflating your price to $510,000 you are essentially financing 80% of that $10,000 over the life of your loan. That $10,000 could cost you a whole lot more by the time you sell your home or pay off your loan. Another consideration is whether it will weaken your offer. A well advised seller knows that appraisals can be challenging in this market. Using the above example, the home would have to appraise for $510,000 rather than $500,000 if the seller agrees to subsidize closing costs.
A benefit of asking for a closing cost subsidy is that you can hold on to your $10,000 rather than using it towards closing costs and invest it elsewhere. With interest rates as low as they are, I can see you making a strong argument for this.
Now that I’ve talked a little about whether it is a good idea or not, let’s talk about whether it is possible.
Below I have provided a list of Arlington zip codes and the corresponding average ‘sold-to-original-list-price’ ratio for the month of June 2012 (according to RBI an MRIS company). This should provide some insight into exactly how little sellers have needed to concede on their prices.
- 22205 — 99.22%
- 22204 — 98.39%
- 22206 — 98.3%
- 22201 — 97.38%
- 22203 — 97.16%
- 22207 — 97.12%
- 22101 — 96.61%
- 22209 — 95.25%
- 22202 — 95.21%
- 22213 — 94.53%
If you are considering a reasonably priced, desirable home in the 22205 zip code, the sellers are unlikely to feel compelled to cover your closing costs. The key to my statement is ‘reasonably priced’ and ‘desirable’. If the home is lacking in one of these categories then game on. You are likely the sole bidder. Ask for closing costs if you want them and by all means ask for a discount on the price as well.
I can think of a situation that exists right now where one of the nicest condos in Clarendon is sitting on the market because it is overpriced. Though it is a beautiful home in an ideal location, it is likely to be a great target for concessions assuming that the seller can be convinced of his or her folly.
In conclusion, there are still some opportunities in Arlington where you can negotiate having your closing costs subsidized by the seller. Tools you can use to gauge the situation are the number of days-on-market, seller motivation, desirability of the home, price compared to comparable sales and location.
Another factor that is easily underrated is negotiation strategy. You need to make a strong, compelling argument for your position and the desirability of you as a buyer without turning the other party off. Maybe we will have the opportunity to discuss this more in a future article.
Strong wind gusts have brought down trees and knocked out power in parts of Arlington tonight. More than 3,500 Dominion customers were without power in Arlington as of 10:45 p.m….
A 40-year-old Arlington man has been arrested and charged with murder. James Ray Williams is accused of fatally shooting a man at an apartment on the 100 block of N….
Arlington is not just a place on a map — it’s a community. And the heart of this community lies in its small mom-and-pop shops. These small, family-owned businesses have…
Good Friday evening, Arlington. Today we published articles that were read a total of 8607 times… so far. 📈 Top stories The following are the most-read articles for today —…
Arlington and its neighbors have become more segregated in the last 10 years while fair housing legislation at the state level faces significant roadblocks. Arlington’s fair housing enforcement, education, and commitment to equity practices in housing policy and programs are beginning to show signs of improvement but much more needs to be done.
Join the NAACP Arlington Branch, HOME of Virginia, and Equal Rights Center for the 2nd Annual Arlington Fair Housing Conference on April 15th to discuss the threats and opportunities to advancing fair housing policy across the state and within Arlington.
The half-day, in-person event will feature speakers from fair housing advocacy organizations and government agencies including the U.S. Department of Housing and Urban Development, and focus on fair housing policy trends in Virginia and Arlington County. The conference aims to advance the understanding of issues and policies related to equity and affirmatively further fair housing among local officials, advocates, and members of the public.
2nd Annual Arlington Fair Housing Conference
Is home ownership a goal of yours in 2023? Now is the time to make it happen! Grab a (virtual) drink with the area’s top Real Estate experts, learn all about the home buying process and on how you can get $1,500 towards your closing costs immediately!
Did you know the average Arlington renter will spend $150K in 5 years of renting? Stop paying down someone else’s mortgage! Join us for a Rent vs. Buy Happy Hour on Wednesday, April 5th at 6 p.m. via Zoom. If this time doesn’t work, we also are offering times convenient for your schedule!
A lot has happened in the local market since the beginning of the pandemic. Sip on your drink of choice and learn from Northern Virginia, Arlington and Washingtonian Magazines top producing agents! We will discuss the latest market updates, the home buying process and rent vs. buy cost savings. Please RSVP by clicking here.
Call/text Manavi at 703-869-6698 with any questions!
Private School Fair
Congressional School to Host MONA Private School Fair Thursday, April 27 at 6:30 PM
Congressional School in Falls Church, VA is delighted to host the MONA (Mothers of North Arlington) at an upcoming Private School Fair. Private schools from around
WHS Spring Festival
Join us at the WHS Spring Festival on April 22, 2023, from 10am- 3pm at Wakefield High School(main parking lot). Come out to shop, play, and eat!
Shop local vendors, arts & crafts, new and used items, food vendors/trucks, and