Home > Mortgages > Can You Still Get a Seller to Pay Your Closing Costs in Today’s Housing Market?

Comments 0 Comments
Advertiser Disclosure


Home prices have risen across the country, and in many areas, the market is so hot that it’s gone from a buyer’s haven to a seller’s market. With that change, buyers may have less leverage than they did during the market’s down years. Despite that, here is how you may still be able to obtain a seller credit for closing costs.

A credit for closing costs involves the seller of the property you’re interested in purchasing receiving less net proceeds in exchange for crediting you monies at closing. Here’s an example. If you’re making an offer to buy a home at $450,000 and you’re asking for a $10,000 closing costs credit your offer is really $440,000 as the additional $10,000 transfers from the seller to you. Also known as a seller concession, a credit for closing gets your foot in the door with less of your own funds needed.

Let’s quickly rewind the clock three years ago for a moment. The year was 2012, unemployment was over 8%, consumer confidence was bleak, and doom and gloom rattled the housing market. Homebuyers were in the driver seat, and sellers were practically begging for offers. During this time, obtaining seller credits were not only reasonable, but very common. Banks holding foreclosed inventory would often offer concessions to offload homes to meet year-end quota expectations for shareholders. Fast forward to 2015, unemployment has dropped significantly, and consumers are feeling more optimistic about their financial health. What can you do now?

How to Get a Seller Concession for Closing Costs

Buying power is a big factor in this. The more house you can qualify for on paper, the more wiggle room you have in supporting a higher price, possibly generating a seller kickback toward your cash to close. Essentially, you are financing the fees by virtue of paying more for the home. If successful, you pay more for the home in these areas:

  • Final Sales Price
  • Loan Amount

Generally, you will pay less for the house without a seller concession of any kind. This also means your fixed housing costs will be lower in such a scenario, since your mortgage will be smaller.

If you don’t have the cash to get the home, you can debt service the difference with the seller concession strategy, but the cost of that debt servicing can be rather costly both in terms of your monthly payment as well as total interest charges on the life of the loan, especially if funds are tight going in. This is why it is precisely important to be as strong as possible on paper when getting pre-approved. Your credit is a major factor in your borrowing power, and improving your scores even slightly can make a major difference in the loan amount your lender can offer. You can check your credit scores for free on Credit.com to see where you stand.

When Should You Ask for the Concession?

If you want to ask for a seller credit for closing costs, there are two optimal times to make that request:

1. Upfront

You can make the request for a seller credit upon submitting your offer with the guidance of your real estate agent. This strategy is more effective on homes with longer days on market (DOM). If a home has been sitting for a while without offers, the price may be too high. It’s generally more difficult to ask for a concession on brand-new listings as other strong offers may be coming in, possibly outbidding yours.

2. After Inspections

Most buyers and sellers are opportune in nature. Each party will attempt to stretch their dollars as far as they will go at the expense of one and other. The buyer wants the best deal on the home while the seller wants the maximum they can obtain for their home. Both objectives are at odds with each other. A seller may be more inclined to pay closing costs than to lower the cost of the home if there’s a “surprise” from the inspection that makes you want to run.

As an informed homebuyer, it’s also important to understand that while you can ask for a credit for closing costs, you can also request a reduction in the house price as well. Say you’re in agreement to buy that $400,000 home, and your appraisal comes in at $385,000. You could ask for a credit for closing costs, but asking to reduce the total price to match the appraised value might be a better approach since it will lower your monthly housing payment. The sky is the limit. You can ask for a credit for closing costs and a reduction of the purchase price, but in most cases is usually one or the other. Talk to your mortgage and real estate professional about which is the most beneficial for you.

More on Mortgages & Homebuying:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team