This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: Is it realistic to expect a seller to pay all of my closing costs?
Answer: Over the last 18 months, Arlington sellers have paid for a buyer’s full closing costs in less than 4% of transactions. In May, I wrote a column explaining that in a standard transaction with a mortgage, buyers are responsible for paying about 2.5-3% of the purchase price in closing costs (reference the article for a breakdown of what is included).
Closing Cost Assistance vs Repair Credits
Seller contributions towards closing costs are often referred to as Seller Credits or Seller Concessions and serve to reduce the amount of cash a buyer needs to put up at settlement. If a seller offers a credit for a broken washing machine, painting or something that comes up during the home inspection, that credit falls into the same bucket of money.
In other words, regardless of whether the money was negotiated under the pretense of closing cost assistance, repairs, updates or a combination of the three, it is all considered a Seller Credit/Concession and deducted as one lump sum against closing costs at settlement.
In some cases, lenders limit the amount of closing costs a seller can pay for (e.g. investor loans), but most of the time buyers can try to negotiate for the seller to pay up to 100% of those costs and sometimes more than 100%.
You should always ask your lender to confirm how much seller credit you can negotiate because if you negotiate for a 4% seller credit, but are capped at 2%, you may end up losing out on the extra 2% you negotiated for.
Let’s take a look at how much Seller Credit Arlington buyers have been able to negotiate over the last 18 months. Note that there is no way of knowing whether the credits were offered up-front by the seller as incentive, negotiated during the initial offer negotiations and/or as a result of defects found during the home inspection.
- On average, buyers negotiate Seller Credits worth .4% of the purchase price or just over $2,000 per transactions
- 5% of transactions did not include any Seller Credits
- Buyers negotiated a Seller Credit worth 2.5% or more of the purchase price in just 3.8% of transactions
The higher the purchase price, the less likely buyers are to negotiate a Seller Credit. There is a huge drop-off in average negotiated Seller Credit on homes worth over $500,000.
If you have a limited savings and require the seller to pay some or all of your closing costs in order to comfortably purchase the home you want, it’s important to discuss that early on with your real estate agent and build it into your purchase strategy.
If you don’t create an appropriate strategy around closing cost assistance, you may find yourself wasting a lot of time during the search process and losing out on multiple offers. If you ever want to discuss a purchase strategy, send me an email at [email protected] to schedule some time to talk.
If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.
Good Friday evening, Arlington. Today we published 6 articles that were read a total of 14680 times… so far. 📈 Top stories The following are the most-read articles for today…
Police issued a traffic ticket every six minutes, on average, during an enforcement effort in front of Nottingham Elementary on Thursday afternoon.
Police swarmed the Rosslyn neighborhood after an alleged thief led an officer on a brief foot pursuit.
It’s holiday time and the lights are coming on in Arlington. Over the next several weeks, a slew of tree lightings, Santa visits, markets, and holiday celebrations are happening around…
Join us December 10 & 11 for our Annual Handmade Holiday Workshop Series. We have a myriad of fun and festive programs from linoleum block wrapping paper printing and buttonhole book making workshops led by Eliza Clifford to a meditative grid workshop and Calligraphy Card Making with Anjelika Deogirikar. Join these wonderful artists and get creative this holiday season!
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We provide a confidential and convenient way to get the help you need from the comfort of your own home.
We offer a free 15-minute consultation to see if our services fit your needs.
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Join us as we celebrate the holiday of Chanukah! Enjoy delicious Latkes, hot cocoa, donuts and more!
Clarendon Menorah Lighting and Community Celebration
Experience the festival of lights!!
*Lighting of a giant 9 foot Menorah