When negotiating, what are the advantages of a seller offering to pay all or part of the buyers closing costs, versus just lowering the sales price?

In other words, if a seller says they will pay $2000 towards closing, why is that not the same as just knocking $2000 off the sales price?

What are the advantages?

Advantages are less money out of pocket for the buyer. You're limited to paying 3%-6% though, because you're in effect wrapping some costs into the loan which are not part of the home's value. The buyer owes more than the home is worth, at least for the first few years, etc..

Because the buyer will still need to bring cash to closing. That's the problem - that most buyers don't seem to have cash for closing costs

The difference is time-value of money... 2K at closing is not the same as 2K "less" financed over the life of the note.

As a buyer's agent, I would sell my client on doing that.

If I have a cash buyer, it doesnt matter.

As a seller's agent, I would also sell buyers with that by educating them about time-value of money.

I'd much rather finance 2k over 30 years than pay it now. At 6.5% that 2k will cost me $4,551.

Over the last 10 years the S&P has averaged a 13% return. Even if I'm conservative at 10% I'll turn that 2k into $6,000 in 30 years.

So the buyer is 33% better off by reducing out of pocket expenses and financing the 2k

I Ditto what Realtor Rusty so stated.

need advice in counter-offer situation.
I am buyer broker and submitted a purchase offer for $197,000 ( 2,000 earnest deposit & 20% down at coe)(asked seller to pay $1600 loan origination & home warranty) on a condo listed for $204,500-
owner agent countered#1 back at $204,000 agreed to seller pay $1600 loan origination
buyer pay home warranty
I wrote counter offer #2
$200,000 buyer to pay home warranty
seller to pay 1600 loan origination fee
the comparables are all under $200 & the market in my area is a buyers market any suggestions on how to come to a meeting of the minds? Help buyer only wants THIS CONDO

what was the response to your counter offer? It seems fair.....no way to make someone agree to it... but it seems like a safe move since the comparables are are under 200 - you dont want to get a higher price agreed upon and then have the appraisal not go thru.....