Question: My neighbor said he just sold his home but
he had to pay the buyers closing costs. No one ever paid for my closing costs.
If I didn’t have the money, I didn’t buy it. Why is this allowed?
Answer: First
off, your neighbor did not have to pay for his buyers closing costs. He chose
to as part of the negotiations. Your neighbor was satisfied with his bottom
line, which is simply the net sales price of the home. There is no difference whether he paid for
his buyers closing costs or simply reduced the sales price by the same amount.
The closing costs were taken out of your neighbors proceeds at closing. No
money was given to the buyer upfront.
This transaction must be viewed as only a business deal. Keep your
emotions out of it.
Times are different now. Paying a buyer’s closing costs has advantages
to the seller and buyer. For sellers, it presents an option in negotiations to
help them sell their home. For buyers,
it allows them to either ‘buy down’ their mortgage interest rate or to have
extra cash to update the home or make other improvements that may be needed.
A successful business transaction takes place when both
parties are satisfied with the deal. Apparently your neighbor was
satisfied or he wouldn’t have accepted the offer.
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