Buying a house can be a struggle. You’ve got to pay for inspections, appraisals, and closing costs. It can be a huge weight on your wallet.

You might be able to lessen some of the impact by talking to the house seller. They could be willing to take care of it for you, depending on the situation. 

To take advantage of seller paid closing costs, you’ll have to be ready to negotiate. You’ll also have to be prepared to possibly pay more on the total cost of the house. 

These are only a few things to keep in mind. Check out this guide to learn more about who pays closing costs and why. 

What Is a Closing Cost? 

So, first thing’s first. What is a closing cost? It’s all the fees that are associated with the closing of a home

These costs include lawyer fees, real estate agent fees, credit bureaus, home inspections, title search fees, homeowners insurance, property taxes, and more. 

All of these fees can take up about 6% of the total cost of the home. You might be able to use FHA loans to pay them, but some lenders have rules regarding it. You might not be able to apply all or any of your loan toward it. 

How to Get the Seller to Pay the Closing Cost?

In most cases, the buyer is the one that takes care of the closing costs. You might be able to negotiate with the seller, though. If they’re in a hurry to get rid of the home, they could be willing to handle the fees for you. 

You’re going to have to make it worth their while. If you try to lowball them on the final cost of the house, or you attempt to hold off on the closing, they’re not going to want to help you. 

Don’t Lowball the Seller

You can forget the seller paying closing costs if you lowball them on the total price of the home. It gives the impression that you’re trying to take advantage of the seller. 

Be prepared to pay for the entire asking price of the house. Doing so shows that you’re serious about buying the property, and it will get you on the seller’s good side.

Avoid Making a Lot of Demands 

The seller isn’t going to want to handle the closing costs and pay for a bunch of repairs. They might be willing to take care of the stuff that fails the home inspection, but don’t ask them to do things that you can do yourself. 

You can replace the carpets and do a paint job in the bedrooms. You don’t have to get the seller to do it. If you make a lot of demands, the seller will probably go with a different buyer. 

Don’t Hold Off Closing

The seller wants to get rid of their property as soon as possible. If you can make that happen, they might be willing to cover the closing fees. 

To prevent any hiccups that would annoy the seller, it’s a good idea to get a preapproval on the house loan. This way, everything is covered. All you have to do is hand over the asking price. 

Be Ready to Negotiate 

The thing that you have to remember is the seller’s funds might be a little thin. They’re selling their home while also buying another one. They have to stage the property that they’re selling and pay real estate agent fees. 

They may not have the money to take care of all the closing fees, but they might be able to handle some of it. That’s when you open up negotiations. 

Let’s say that the entire price of the closing costs is 8,000 dollars. If you can pay 5,000 dollars of it, the seller may be willing to give you the remaining 3,000. 

Disadvantages of Seller Paid Closing Costs

There are some disadvantages of getting the seller to pay the different types of closing costs. You may end up paying a higher price for your home, and you could run into issues when it comes time to get an appraisal. There’s also the little matter of interest. 

High Sales Price

The seller isn’t going to pay your closing fees out of kindness. This is true no matter how much you get on their good side. They want something out of it. 

Usually, this something else is a higher home cost. For example, the price of the home is 250,000 dollars, and the closing cost is 7,000. Having the seller pay the closing might knock the price up to 257,000 dollars. 

Issues With Appraisal 

Before giving you a loan, the lender will order an appraisal. If the value of the home clocks at the same amount as the loan, you’re in the clear. 

If the cost of the home goes up due to the seller covering the closing cost, it may cause the value to go over your approved loan amount. If that’s the case, you’ll have to make up the difference. If you can’t, you’ll lose the house. 

You’ll Pay More Interest 

If the seller covering the closing cost causes your mortgage to increase, it’s fair to say that your interest rate will shoot through the roof as well. In the end, there’s a good chance that you’ll spend way more on the house than it’s worth. 

Your Guide to Home Closing Costs 

Taking advantage of seller paid closing costs is a great way to shave a few thousand dollars off the price of your home. You may have to pay it back later in the form of a higher mortgage, but it could be worth it if you’re having issues covering the cost of the property and the closing fees. 

If you’re looking for more house buying tips, we’ve got you covered. Visit the Real Estate Talk section of our blog for all the latest advice.