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We have all seen sellers’ banners, billboards, and ads that say “3 ½ percent Credit to Buyer’s Closing Cost.”  Sellers know it, you know it, it’s no secret we’re in a buyer’s market and you’re going to be asking for the closing cost concession in your offer.  So why not put the word out there?

With the appraisal industry being closely watched right now, banks are suspicious of what could be considered price bumping.  This is where the offer price is more than list price, but with a credit going back to the buyer inside the confines of the purchase and sale agreement.  (Not quite cash back but you get the idea.)   When a seller sets their price they need to consider if it will appraise for the value.  At the same time buyers are asking for closing cost on most occasions.  It’s a delicate balance to insulate the house value with the appraisal, buyer’s offer, and closing cost credit.

What does the closing cost credit mean to you and how do you spend it? Non-recurring costs are covered by the closing costs credit and, in some loan products, reoccurring cost might even be covered.  Examples of these could include title, escrow fees, interest rate buy downs, origination fee, etc.  Your lender can help you to find out how much you will need from the seller.  It’s important to know beforehand because if you don’t use it the seller keeps it.

There are always creative ways your agent and lender can help you apply these closing concessions.  Try to have this conversation your agent before writing an offer so that you can better strategize your negotiation with the seller.