When you’re buying a house, you may discover a major problem that costs a lot to be fixed (roof damage, HVAC issues, etc.) 🏚
Instead of asking the seller to lower their asking price to compensate the difference, ask them to give you a seller’s credit instead. 💵
The seller will net the same amount of money, but it’ll help you out a lot because you’ll be able to wrap those expenses into the loan, keeping more money in your pocket. 🔺
As an example, if you purchased a property for $300,000 and discovered that it needed an additional $10,000 in repairs, here’s how each scenario would play out:
1) Reduce the price by $10,000: In this scenario, your new purchase price would be $290,000. With an 80% loan, your down payment would be $58,000, but you would have to spend an additional $10,000 for the repairs. So your out of pocket expenses would be $68,000!
2) Keep the sales price the same, but get a seller’s credit: In this scenario, your purchase price is still $300,000 and with an 80% loan, your down payment comes out to $60,000. But this time, the seller’s credit back will cover the costs of the repair. So your out of pocket expenses are only $60,000!
By getting a seller’s credit instead of lowering the price, you were able to keep $8,000 in your pocket, letting you invest the difference and grow your net worth! 🏡
What are your thoughts about getting a seller’s credit at closing? 😊
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