Should the seller of a home accept buyers’ closing costs?

Closing cost are fees that are paid for the closing of a home loan. Closing cost usually included loan fees for the loan officer for helping with the loan, the appraisal fees, administration fees, determining flood maps, used to help close the loan.

Many times in a real estate transaction, the seller of the home will agree to pay the buyers closing costs. If you are selling your home and you have a reasonable offer for your home, you should expect to pay the buyers’ closing costs.

I appraised an attached home the other day where a buyer offered to buy the sellers home if he agreed to pay 3% of the closing cost. When I got to the home, the owner was pissed because he did not want to give 3% of this money to the buyer for the closing cost. The seller thought he was losing this money. In this case, he was absolutely incorrect.

In any market, there is a range of value for homes in any area and in this case, it is no exception. When the owner decided not to proceed with this deal, I was half way through the appraisal and enough to come to a conclusion regarding his home value.

His home was priced at the higher end of the value range and even after paying 3% of the buyers closing cost he would be getting the top value for his home. If he would have accepted this deal, he would be getting a reasonable amount for his home. The buyer of the home would be paying full market value of the home. Little does the buyer know they will be increasing their loan to pay for their own closing costs.

The moral of the story is if you are selling your home and you agree to pay up to 3% to 5% of the buyers closing costs and the value of your home is at the higher end of the value range, you are not losing. You are wining. You see, this is because the buyer will take out a larger loan to buy your home and use some of the money to pay their own closing cost. So while it seems like you're losing the closing cost money, in many cases you are not.