Why First Time Homebuyers Should Always Ask For Seller Paid Closing Costs

Why First Time Homebuyers Should Always Ask For Seller Paid Closing Costs

One of the most difficult things for a potential first time homebuyer to do is to come up with not only the down payment for the purchase of a home, but also having the money available to cover all of the closing costs which can be anywhere from 2-3% of the purchase price of the home.  This is why I as an expert Realtor always work to find out the situation of my buyers and their mindset.


For example, the average homeowner lives in a home for 7-10 years before making a move. If that is the case for you, then it makes sense to pay closer to the list price for the home and have the seller pay your closing costs.  For example, in the west suburbs of Chicago where I am located, the average sales price is $300,000 for a single family home. If I and my team were to negotiate a purchase price of $300,000 but have the seller pay $7,500 in closing costs versus  purchasing the home for $292,500 the following scenarios would happen

At a $300,000 purchase price with earnest money of $2,000 and  with $7,500 in seller paid closing costs, plus the real estate tax pro-ration an Illinois first time homebuyer using the Fannie Mae Home Ready program of just 3% down  could expect the following:

  • $1,000 in funds to bring to closing 

  • monthly principal and interest payment of $1,398.28

At a $292,500 purchase price with the same earnest money of $2,000 , the same real estate tax pro-ration but no closing costs paid by the seller; the Illinois first time homebuyer using the Fannie Mae Home Ready program (3% down) could expect the following:

  • $8,500 in funds to bring to closing

  • monthly principal and interest payment of $1,354.55

So, in order to spend more money in the monthly payments versus the initial savings, you would have to live in your first home 171.5 months or 14 years 3 1/2 months . If the chances of that happening are slim and none, and none walked out the door... you should ALWAYS ask for closing costs paid by the seller.......

And if you are my client, I will make sure you get them


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Phone: 630-202-7241
Dated: June 6th 2016
Views: 205
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