Have you ever received a gift with purchase? It’s a great marketing gimmick – a little something extra to say thanks for buying our product or service. Did you know that you can get a gift with purchase when buying a home, too? It’s called a seller concession or seller assist, and it’s a gift from the home seller to the home buyer.
What you may be asking now is, “Why would a stranger give me money for buying their house?” Well, if the seller is motivated, doesn’t want to go through the trouble of making certain repairs, or agrees to help you roll some of the closing costs into your loan, that’s why they’d give you money for buying their house.
What is Seller Assist?
Seller assist is a financial contribution of up to 6% of the home’s purchase price that the seller makes to the transaction. The seller uses cash, usually to offset some of the closing costs. This contribution doesn’t normally result in a reduced cost for the buyer, though. In fact, most buyers repay the seller assist by increasing their offer by the amount of the assistance. The home must appraise for at least that value, so it’s important to understand that seller assist isn’t always possible.
Seller assist reduces the amount of cash the buyer needs to buy the home. Of course, most of the house is covered by the mortgage, but there’s a down payment and closing costs that are paid upfront. The seller has access to more cash because they have equity in the home that can be accessed. Once the seller receives the funds for the house at settlement, they pay off the home equity loan or line of credit that covered the assist.
What’s the Goal of Seller Assist?
In some cases, the seller offers a concession because there are repairs or updates that need to be made, and the buyer is willing to have these done after settlement. The sale price of the home remains the same, but the seller pays most of the closing costs so the buyer can put their share towards those repairs and updates.
Sometimes the seller assist is for no other reason than to save the buyer some cash on the transaction. This is most common in a buyer’s market, where the buyer has slightly more negotiating power. With this cash incentive, the buyer is less concerned about coming up with all the funds needed for closing. It’s still possible in a seller’s market with the right circumstances and experienced real estate agents representing each party.
Mortgage lenders have their own standards regarding seller assist, so make sure it’s available at the amount you need before you negotiate on it. Your agent should also have a good idea of how the house will appraise and can advise on whether or not asking for the concession is a good financial strategy.
If seller assist isn’t possible for the house you want to buy, talk with your agent about the next best strategy. 1SlickHome.com and The Geoff Slick Team are careful to understand our clients’ specific needs, goals, and challenges before we start walking them through properties. We talk about strategies and contingencies to make sure you can buy a house you love at a price you can afford. Sometimes that means waiting and passing on what looks like a dream property, but the right house will always come along.
At 1SlickHome.com and The Geoff Slick Team, we take pride in our ability to educate clients on the best way to purchase a home. We stay up to date on industry knowledge and trends, and we come alongside each client with integrity and fiduciary support to help them achieve their real estate goals. If you’re looking to buy in the Western Philadelphia suburbs around Montgomery and Bucks Counties, contact us to get started on your path to a new home.