For quite a while, the real estate world was a seller’s market. Houses were selling quickly, with offers exceeding the asking price for many properties. However, with the increase in interest rates, the housing market will likely slow down a little bit as buyers become choosier with their offers. As power shifts, you may be asked to pay the buyer’s closing costs when negotiating a deal to sell your home. It’s essential to understand what’s involved and some criteria to think about as you decide whether or not to cover them.
What are closing costs?
During a sale of real estate, both the buyer and seller are obligated to pay many fees as “closing costs.” Understanding the financial responsibilities of both parties will help you decide what costs, if any, you want to take on from the seller to negotiate a deal.
The seller is usually responsible for:
- Half the escrow cost,
- Owner’s title insurance fees,
- City or county government fees,
- Agent commissions.
The buyer, on the other hand, has a more significant share of fees to cover:
- Half the escrow cost,
- Buyer’s title insurance and title search fees,
- Deed recording fees,
- Cost of home inspections,
- Flood determination and monitoring fees,
- Pest inspection fees,
- Loan application and origination fees, and
- Appraisal fees.
Is it a good idea to pay the buyer’s closing costs?
You should carefully consider whether or not you want to cover the buyer’s closing costs. Here are a few factors to help you decide what you should do:
First, you need a clear picture of what the closing costs will include. It’s often a good idea to cap the dollar amount. You need to make sure that your sales price, after all of the costs you will pay, is enough to make you feel good about the deal.
Second, make sure the buyer has completed their inspections, and they and their mortgage company have signed off on any expectations. You don’t want to offer to pay closing costs and then be asked to pay for repair costs you hadn’t anticipated. Some sellers will offer to pay the buyer’s fees instead of repairs; however, you need to make sure the mortgage company will still approve their loan under those conditions
Finally, before accepting an offer, you want to feel confident the buyer is financially sound enough to be approved for the mortgage. If they are putting down a significant down payment and want you to cover the buyer’s costs, they are likely in a good position and just desiring a better deal. However, if they have a minimum down payment, this may be a sign they can’t afford the home, and the deal may fall through.
A good real estate professional can help you make sound decisions about buying and selling homes.
The best place to begin your journey is with an experienced real estate agent like Gail Schoeneberg. Gail has extensive experience and knowledge, including marketing financing and buyer and seller representation in the Southern Oregon market. She will help you understand your options when selling your home. And, of course, if you’re buying a new home, Gail will be at your side until you find the perfect new one for your family.
Contact Gail Schoeneberg today at 541-840-1909. Your new home awaits.
