There are many things in life that include extra fees. Sales tax is added on to most purchases. Service fees are added on to credit card statements. In real estate, that extra fee is seen through closing costs and finding a deal that either mitigates or removes those closing fees from what you have to pay can be a great goal as you go through the home buying process.
While that can be a difficult prospect, working with a seller on the purchase price of the property can make a closing fee free transaction a more realistic proposition. In fact, getting a seller to pay your closing frees in exchange for a bit higher purchase price can be a financially sound decision.
While that might sound like saving now only to pay later, avoiding that outlay of cash can give you money to invest now for a return on your money instead of saving a little bit on your mortgage payment by paying those same closing costs.
Adding a few thousand dollars to your loan amount may seem like a bad idea because it will give you a bit of a higher mortgage payment but because you don’t have to make an initial outlay, you instead pay your $5,000 or so dollars in closing costs over an extended period of time instead of all at once. With that freedom, you have given yourself the ability to invest that money or do something else with it that might net you a bigger benefit than simply paying off a title company at closing.
The Hard Part: Finding The Deal
Of course, the trick can be finding a seller that is willing to work with you on a closing cost arrangement. For most sellers in a fairly brisk market, making these kinds of extra provisions is unnecessary with the steady stream of interest in a particular piece of real estate. However, in every market, there are homes that are prime candidates and there are a few signs you can look for.
One of the most tell-tale signs of a seller that is willing to work with you is if the home has been on the market for an extended period of time. As frustration builds over time with a home staying on the market for a long time, a seller generally becomes more apt to satisfying the needs of a particular buyer, especially one that is pre-qualified for a particular loan amount.
Any situation that involves the move of the seller out of town, such as a job relocation or divorce situation, might make the seller more motivated to sell and thus, more motivated to work with you on a no closing fee transaction. Sometimes you can even negotiate a lower selling price in these situations. If you can do that and get a no closing fee transaction, you will have doubled your benefit.
While not all agents are comfortable asking for some closing costs to be paid by the seller, just remember that they are working for you. They ultimately must do their best to represent your wants and needs, so if you insist on at least submitting an offer that includes a provision for the seller to pay closing costs, they must do so. It is often worth the effort and pursuing a closing fee free transaction can sometimes result in a new home with no money out of your pocket.
No matter what you do with your money that would have been included in closing fees, maintaining freedom over your own money is a great thing to have. By targeting transactions with sellers that might be motivated to work with you on a closing fee free deal, you too can keep this money for yourself and put the control over the transaction in your own hands.