How to Save on Closing Costs? Ask the Seller to Pay!

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How to Save on Closing Costs? Ask the Seller to Pay!

How do you avoid paying closing costs when you buy a home in Orange County?

Here’s the scoop – you may be able to avoid paying closings costs the next time you buy an Orange County home!  Seriously.   Things like escrow fees, title insurance, documentation fees, wire fees, HOA transfer fees, and a hand full of other assorted closing costs can really add up.  In some Orange County neighborhoods, there’s even a Lifestyle Enhancement Fee – like in Ladera Ranch.  And a penny saved is a penny earned – right?  You may want to consider asking the seller to cover those costs for you.  And if you play your cards right, they just might agree!  Winner winner chicken dinner!

How in the world does this work?

Let’s take it one step at a time.

What kind of Orange County seller might be open to this sort of arrangement?

Mostly, equity sellers – owners who owe less than what their home is worth in today’s market.  However, I’ve seen several instances where the Asset Manager and the Investor on an REO home have agreed to a credit to cover all or part of the buyer’s closing costs.  Some banks even advertise that credits are available to help buyers with closing costs.   Short Sales, on the other hand, are probably a longer shot, since the bank is already losing money on the deal.

Why would a seller agree to pay some of the buyer’s costs?

Because you are making a reasonable offer that takes the amount of the credit into consideration?  Because you have astoundingly high credit scores and excellent income?  Because you are making a huge initial deposit?  Because you agreed to keep their pool table (which would have cost them a fortune to more?) There are any number of reasons why a seller will agree – the trick is to find out as much as you can about what’s important to them, and then do what ever you can to give them something in return for the credit.  As in any negotiation, it all depends on how you package the request.  Make it as easy as possible for the seller to say yes.  Back to the win-win concept.

In today’s Orange County Real Estate market, it is unlikely that you will be able to negotiate a super low price (based on the current market value) AND ask for a credit on top of it.  That’s like a double gut shot.  This might work with a seller who is REALLY motivated.  Or it can back fire.  The seller may say no and refuse to even counter you, walking away from the deal.  Ahhh, the negotiating dance is never boring!

What’s the catch?  There’s got to be a catch.

Ask your lender if the credit falls within the parameters of your loan product.  That’s a big fancy way of saying – everyone has to know about the credit and everyone has to be OK with it, including the lender.  Some loans have caps on credits the borrower (that’s the same thing as the buyer) can receive.  Make sure you know in advance – instead of when it’s too late and you lose the house.  And yes, your Realtor can help you with all of this!

If you have questions or want more information, give me a call!  I’m Leslie, just keeping it real in Orange County Real Estate.  949-678-3373

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