Dear Jan: They say that we are moving into a seller’s market, that the inventory is low. My real estate broker told me that when we get an offer on our home, that most likely the buyer will ask us to pay part of or all of the buyer’s closing costs. In our case, this would be about $9,000.
Why would we need to pay those fees?
The good news is that yes, indeed, the market has shifted and we are almost in a seller’s market. This means that prices are finally going up after a few tough years of decline.
On the Seattle side, the inventory is extremely low. With the interest rates so low, there are lots of buyers looking for homes. Multiple offers on one property are very common in the Seattle market right now.
On our side of the water, we usually follow behind by several months. I have actually had a few multiple offers this year, and my inventory has really gone down too.
Now, about the buyer’s closing costs. Lenders are still requiring a down payment from buyers. Rarely do the buyers have enough cash to pay those down payments plus their closing costs (which, by the way, amount to approximately 3 percent of the loan amount, so on a $200,000 home that is $6,000). So what do buyers do? Ask the sellers to pay the closing costs for them.
Sometimes, buyers ask for closing costs and a price reduction. My experience is that if the home is priced correctly, what they truly want are for those closing costs to be paid, so they will settle for just those costs. Your broker will be able to advise you as to whether a counter-offer is wise.
In a true seller’s market, we could add the closing costs to the loan amount and most likely the home would appraise for the new dollar amount and close just fine. But we are not quite there yet. Prices will need to recover more before a lender and/or appraiser will take that added 3 percent risk.
Pricing is critical in selling your home. And knowing your expenses is also critical. Your local broker is able to do a “Seller’s Net Sheet” showing you your expenses as well as what the buyer may ask you to pay. It is all part of the equation for now.
Best wishes with your sale!
— Jan Zufelt is an agent with John L. Scott Real Estate in Kingston.