Seller Assist

Seller assist does not reduce the purchase price; it is a contribution from the seller toward the buyer settlement costs. Convincing the seller to contribute to the buyer’s closing costs works in conjunction with the price offered, market conditions, seller’s need to move, mortgage company approval and buyer proof of need.

Why and how does the buyer show a proof of need? Buyer must complete a Buyer Financial Worksheet that shows a buyer assets and liabilities. The assets cannot beoverstated and the liabilities cannot be understated. The seller can determine from this information and the terms of the agreement if the buyer has sufficient funds to pay the costs for settlement.

Advise for Buyer and Seller

Buyer Advise:

• The maximum seller assist I have seen a mortgage company allow is 6% of the purchase price. The seller assist reduces the seller proceeds as would a reduced price; however, price reduction reduces the buyer mortgage payment and settlement costs for a ripple effect. Reducing the price more than 6%, however, may cause a short sale for the seller and negatively affect the neighborhood that you will live in.
• If you have the resources and want a great buy; one strategy is to offer dramatically lower price, a very large deposit, a settlement date the seller desires and request a 48 hour response to your offer.
• Another option is the seller holds the mortgage. This rarely works since most sellers want to move on, not worry about collecting mortgage payments, or have the risk of property damage in a foreclosure. This option depends on seller desperation and your credit rating.
• Include a minimum deposit amount initially with a large amount to follow will insulate you from a desperate, mean spirited seller who wants to dispute return of your deposit. Return of the deposit money on account if you properly terminate the agreement as described in Paragraph 22 Default, Termination and Return of Deposits. Even if it is obvious you should receive the funds, you may need a real estate lawyer to have the funds returned to you.
• Same as above except the seller wants Mediation. I personally deplore ever using this procedure and can argue that all it does is delay return of your deposit and postpone your search for a property that suits you. Recommend you cross out Paragraph 23 so this will not impede your life.
• Buyer remorse is a fact of life. The doubt – fear – panic will cause you to lose confidence that your decision to purchase is correct. This feeling of doubt can creep into your thoughts and may cause you to terminate the transaction. All buyers are to expect some degree of remorse. Just review the reasons for your initial decision to purchase and your confidence will be stronger than ever.

Seller Advise:

• The maximum seller assist I have seen a mortgage company allow is 6% of the purchase price. This assist reduces your proceeds as would a reduced price; however, price reduction reduces the buyer mortgage payment and settlement costs for a ripple effect. Reducing the price more than 6%, however, may cause a short sale for you and negatively affect the neighborhood by lowering the values.

• If the buyer requests a dollar amount, you will need to calculate the percentage, then contact the mortgage company to confirm if or how much assist they allow. If the buyer requests the maximum amount then the inspections will have to be perfect because the mortgage company will not allow additional assist. Should you and the buyer settle inspection problems with a seller assist, the transaction will not settle since the mortgage company would not allow excess assist.

• The buyer may request a reduction to the purchase price not to disqualify for the assist. This change will cause the mortgage company to reissue the GOOD FAITH ESTIMATE (GFE). Time required for this to complete may delay settlement. Understand your options and the mortgage company constraints.

• Seller remorse is a fact of life. The doubt – fear – panic will cause you to lose confidence that your decision to sell is correct. This feeling of loss can creep into your thoughts and may cause you to terminate the transaction. All sellers should expect some degree of remorse and resolve those doubts before signing the listing contract. Just review the reasons for your initial decision to sell and your confidence will be stronger than ever. See: Define a House; Grief Cycle.

Return From Seller Assist To Part 1