Seller Assistance - Simplified4/16/2014
Seller assistance can be a very useful tool for both buyers and sellers. Many may find this confusing, however we will attempt to simplify the process here. In the buying process, assuming the buyer is not an all cash buyer, the buyer would will need A) a down payment, B) a mortgage and C) cash for closing costs.
Seller assistance focuses on C - “CLOSING COSTS" only. Closing costs typically include mortgage fees, title search, attorney fees, recording fees, prepaid real estate tax and prepaid home insurance. For demonstration purposes, let's assume that total closing costs are $6000 for the buyer. In addition to the buyer’s down payment, which can be 0% for a VA loan (veterans only), 3.5% FHA Buyer, 5% or more conventional, the buyer also needs come up with cash of $6000.
When Submitting the offer, the buyer requests the seller to pay the $6000 closing costs.
…………… Hold on, sellers, don’t get too excited! For example, buyer and seller agree to a sale price of $200,000. The buyer will get a mortgage for $190,000 and have a down payment of $10,000. In the case of asking for seller assistance, we would increase the sale price to $206,000. The buyer still has a $10,000 down payment, however the mortgage amount will be $196,000. Simply stated - the buyer is financing the closing costs. With a 4.5% 30 year mortgage, the monthly payment increases by $30 or $360 per year. At this rate, it would take 16.6 years to add up to $6000. Many buyers would look at this and prefer to have $6000 as reserve and just pay $30 extra per month. FOR THE SELLERS Providing seller assistance is a great way to help sell your property. By helping with closing costs, sellers can attract first time buyers with minimal cash to put down. This is a win-win for both parties. A seller should look at seller assistance as a positive move. Think of the scenario without the seller assistance as basically the price that the buyer is offering. In the above example, the buyer is offering $200,000. The price is increased for the benefit of making the deal. Notes - A word of caution: the increase in sale price must be kept in line with market values. The mortgage company will have the property appraised and the property must appraise for the total sale price.
The taxes, insurance and interest are actually pre-paids, also and for conventional loans with 5% down the max seller contribution is 3% of the sales price.
Can you put a price on experience? In real estate, it can mean $$$ - thousands of dollars if you are selling or buying.
Over the years I have personally attended many seminars, training events and researched to be able to deliver the best client service possible. One thing that I have learned is that well experienced agents or "Veteran Agents" sell homes that they list - at a higher list to sell price than their less experienced agents. Think about it, if a home is listed for $300,000 and the rookie agent eventually sells for 94% of asking price that is a sales price of $282,000, a veteran agent may have a higher selling ratio - 98%, so on $300,000 sale the seller will net $12,0000 more, on a $600,0000 house $24,000 more and on a $1Mil house that is $40,0000!!!
Veteran agents also tend to list more new properties, more townhouses and condominiums and larger properties.
The more experience you have, the more likely you are to sell the properties that you list, the more likely you are to sell it at a higher price and less time it sits on the market.
"If a house is priced ridiculously, an inexperienced agent may take the listing anyway. In the long run the seller will net less because the home sat on the market too long! Generally, experienced agents have greater knowledge of the neighborhoods and a larger network of buyers and sellers".
Joe DeLorenzo, Broker of RE/MAX IN TOWN stated - "When I first started selling real estate 20 years ago, I had some advanced training on pricing, this training proved invaluable in years to come. I have noticed that rookie agents tend to just 'take' an overpriced listing, then the home sits and becomes stale and eventually expires, I have always believed in being honest with a seller and if we did not agree on price, then I would not list the property. In the long run, when a property is priced correctly, the seller will net a larger return, as opposed to a home sitting on the market and the perception of "a problem with the house" takes form.
When Buying a Home - Working with an experienced agent will save you thousands. An experienced agent would do market research for their client, comparing the perspective home to recent sales, and taking into account the condition of the home as well as the upgrades and features. Many times a home could be overpriced and the unsuspecting buyers would not know this unless working with an experienced buyers agent.
Hiring an agent with experience, knowledge, skill and negotiating abilities will save you thousands!
For more info on selling a home please visit
For more info on buying a home please visit
Joe DeLorenzo, known as "Joe D", and his team "Joe D & Co" are the leaders at RE/MAX IN TOWN. "Joe D & Co." prides themselves on helping buyers find the home that they want at the best possible price! If you are selling your home you can count on "Joe D & Co." to get you the maximum value for your home. Providing high quality real-estate service to their clients for more than 18 years "Joe D & Co." have achieved the status of top agents in the local RE/MAX market.
The Tax Deduction explained4/28/2009
Mark and Jen purchased a home for $350,000, with 4800 in property tax. They put 20 % down and have a monthly payment $2182.00. Of this monthly payment $1800 is interest and real estate taxes, which is tax deductible. Mark and Jenn make a combined income of 100,000. Their employers withhold taxes based on their salary of 100K. When tax time comes they are able to claim the mortgage interest and real-estate taxes paid approx. $21,600, this effectively reduces their gross income from 100K to $78,400. When they compare the taxes withheld on their gross of $100,000 to their adjusted gross they overpaid their taxes by approx $5400. Mark and Jenn get a refund of 5,400 just for owning a home!
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