The amount of the assist can not exceed the allowable closing costs as determined by the lender. If the case arises where allowable closing costs are less than the negotiated assist amount the seller pockets the difference. A seller assist is a great feature that allows the seller to pay some or all of your eligible closing costs. In a market where sellers find it difficult to sell their home, a seller assist can be an attractive lure to a prospective buyer.
The buyer finances the assist amount by adding it to the mortgage loan. Yes it will cost the buyer a bit extra each month to finance the assist amount over the life of the loan, but an assist is often the only way the buyer can purchase the property.
Working with an experienced real estate agent who knows the local market can help you get the best deal. Since every case is different, you should discuss your concerns with a tax advisor who can give advice based on your individual situation. Currently, the IRS only allows closing costs deductions on home mortgage interest and certain real estate taxes. However, the mortgage interest tax deduction includes mortgage discount points — money paid at closing to get a reduced interest rate.
A tax professional can go over these guidelines with you and help you steer through buying a home and taking on a mortgage, both of which come with their own sets of tax deductions. Our loan division can also help you with financing through our affordable mortgage packages. UpNest is a no-cost service for home sellers and buyers to find the best real estate agents locally. The UpNest platform allows you to compare multiple agents in your area so you can compare reviews, commission rates, previous sales, and more.
Our agents have been carefully vetted and often offer competitive, lower than average commission rates to UpNest customers. It all depends. Every home-buyer is different. A down payment assistance program can help buyers cover the closing costs and down payment associated with purchasing property. Home sellers can help buyers pay closing costs by giving a portion of their proceeds back to the buyer at closing.
Primary Menu UpNest. Search for: Search. In fact, if the buyer had more cash to apply to the deal, the risk of the buyer failing to secure final approval for financing would be lower. The seller in this case carries a higher risk of the deal falling through. The other very real risk for the seller is that the property may not appraise for the contract price. Remember, the price in the sales agreement includes the seller assist on top of the effective sale price and the mortgage amount is based on the contract price, not the effective price.
So the bank will require that the property appraise for at least the contract price. If it does not, the buyer is protected by a mortgage contingency and thus can walk away and get her hand money back. The seller is left to put the house back on the market and start over again, now with the black eye on the listing that it was under agreement and returned to the market. Of course, the seller can sell the property to the buyer at the appraised value or negotiate with the buyer to split the difference between the appraised value and the contract price.
The buyer would have to come up with additional cash for the amount over the appraised value that he has now agreed to pay, which he may not have since he asked for seller assist at the outset for lack of cash. In a very real sense, if the appraisal is considered spot on accurate on the value of the home, the seller is guaranteeing the buyer that she is getting the property for less than market value, by the amount of the seller assist.
The seller does not pay for the seller assist, but that does not mean there is no cost to the seller. The short answer is anyone who simply cannot avoid it. As mentioned above, sellers will frown on seller assist so a buyer loses some negotiation leverage by using it.
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