How to Make an Offer with Closing Costs Included

Closing Costs

After weeks trolling, visiting open houses every Sunday, and touring countless houses, the perfect home is finally found. It’s the only one that is just the right distance from the elementary school, has the open kitchen with a gas range and the dining room big enough for Grandma’s china cabinet.  Dad has stood in the attic with his flashlight, flushed a toilet and walked the perimeter. He has given it his blessing (if you can get it for a good price, that is).

It’s time to take the next step and make an offer. If you’re like most buyers, you’ll talk numbers with everyone you know first. Suddenly everyone is a real estate expert.

At work, the guy in the cubicle by the water cooler says you have to lowball, that’s what he did. Your friend at the gym says the seller has to pay all your closing cost so you can save your money. Your sweet neighbor recommends that you should either ask for closing cost or a reduction in price, not both. And Dad, well you know him, he wants you to ask for it all. 

You just want to make a good financial decision and have your offer accepted. Getting those closing costs paid could really help your family though. You wouldn’t have to drain your savings to buy the house. But how do you do that and have your offer accepted?

Here’s what you need to know if you want the seller to contribute to your closing cost. There’s really only a slight difference in your bottom line if you offer full price with the seller contributing to your closing cost (offer #1) or offering for a reduction plus a seller contribution (offer #2). Here’s an example based on a house listed for $200,000. In the example, the full price offer will only cost the buyer about $200 more at closing and about $30 more per month in the mortgage payment.

Closing costs

As you can see, it really doesn’t have an impact on the buyer. However, the difference in the same two offers can cost the seller almost five grand after closing costs for both sides and their existing mortgage is paid off! Check out this example on the same offers on a $200,000 house.

closing costs

The seller may not be able to accept an offer that includes a reduction in price AND your closing cost paid. If you want to hold on to your savings and have the seller pay your closing costs, offer full price. After all, it really won’t effect your bottom line at all and you’ll get the house by the school with the gas range and the dining room that’s perfect for Grandma’s furniture. The guy by the water cooler doesn’t need to know what you paid.

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