Here
is an example of how seller assist works and how it effects the home
sale. A Buyer places a full price offer on a house listed at $100,000
but ask the seller pay 3% of the value toward the Buyer’s closing
costs. This means the seller receives $97,000 from the sale (not full
price as it may seem). The buyer is still mortgaging $100,000. So
effectively “Seller Assist” is a credit from the seller to the
buyer that the buyer then finances back into the mortgage.
Below
are short details of how seller’s assist can be utilized with
certain types of home loans.
Buyers may choose an FHA loan is
because of the low-down money required and the allowed seller
contributions are up to 6%. This helps them greatly to cover
most their closing costs.
There are two components to assisted
cost with VA 1. Mortgage concessions (are capped at 4%) can cover
items such as termite inspection, lender fees or money for repairs on
the home that is being bought. 2. Closing Cost there is no cap to the
percentage of closing, however the amount for “closing cost”
cannot be higher than the actual closing cost.
By law lender
fees cannot be paid by the VA Buyer, to protect the Seller from
unreasonably high fees the VA Addendum can limit these fees, i.e.
$400.
Conventional Mortgages the seller assist is tiered, if a
buyer is paying a 5% down payment; the Seller is permitted to pay up
to 3% of the sales price toward the closing costs. A buyer with 10%
to 24% down payment allows 6% Seller assistance and finally a buyer
with 25% down payment allows seller assist of 9%.
These
guidelines do change periodically; it is always best to check with
your agent and lender for the most up to date information.
*I
want sellers and buyers to understand that SELLER ASSIST IS NEGOTIABLE, it is NOT REQUIRED TO BE automatically GIVEN by the
seller to the buyer, when Seller’s Assist is agreed upon it has to
be written into the Agreement of Sale, i.e. Sales Contract.