Representing buyer. Buyer wants to ACTUALLY pay 104,000 for house. Buyer wants Seller to pay 4,000 toward Buyer's closing costs. Buyer can get 100% financing. Do I write the contract to show a 108,000 purchase price. And then does the Buyer get a loan for 108,000? The only thing I'm sure about is that the house will appraise ok. I'm confused! Help!

If the buyer wants to pay $104, but also wants $4k from the seller, you'd have to write up for $108. The house will need to appraise at the full contract price if the buyer is financing 100% ($108k).

Definately make sure it will appraise at full price. Sometimes sellers are weary of doing this as well.

Thanks for the replies! I do think the house will appraise well. Wish me luck!

IMHO Check with the Lender on how much the Seller can assist. Just had a transaction with an interest only loan w/$5,000 Seller Assist. (The Buyer works for the Lender - I don't recommend those type loans!) The home appraised for the inflated amount, but Underwriter informed the Buyer that the Seller Assistance couldn't be that high. We, therefore, reduced the sale price, and fortunately the Buyer had enough funds for closing.
I don't profess to know all underwriting guidelines - that's up to the Lender to advise the Buyer.
But, good luck, Rock!

The sellers agent should also advise the seller that simply adding the $4k into the sale price will not be a break even thing for him... the Seller will have higher selling / closing cost because of the increased basis for things like Commissions, Deed and Transfer Fees, Title Insurance and any thing else that is calculated on the sale price and at this level it could be several hundreds of dollars.

And as stated above, check with the lender to see the max amount the seller is allowed to contrubute... it is often limited to under 3%.

I just had an offer accepted for a client that the seller was to pay $4,500 of the buyers closing costs. I had to present the offer with the listing agent so that my buyer would have a chance. The seller decided to counter our offer on the terms: If there is a appraisal below offered price, the seller reserves the right to cancel the escrow or continue. I'm crossing my fingers. I feel for my client but wish he could have set aside a larger deposit.

I always consult with the lender in question and ask them exactly how they want it written. I also negotiate based on the seller's NET, telling them ahead of time that once we all agree on the NET price the seller will receive, I will then be adding on the 3 or 6% the buyer is getting additional in their loan.

We also calculate commission on the lower amount, since the seller is not really getting the higher amount and it is NOT ethical or fair to charge them a commission on the inflated "money back to buyer" price.

Most sellers do not understand the cash back, and if you negotiate the total price, they just don't get it.

Negotiate the net - then the buyer will get back 3 to 6% of the net. Add that to the top, consulting with the lender the entire time.

Good luck!

Cheri, Realtor in Iowa

Seller concessions can range from 2% to 9%! depending on the loan program. If the seller does not want to pay higher commissions due to concession, include in the contract "Commission paid on base purchase price".

I always calculate it like cherir does and I always run it by the lender to make sure it is written like they want it--Saves a lot of time and potential misunderstandings down the road.

add it on