Does the Arizona Association of Realtors contract allow for sellers to contribute toward buyer closings costs? What about assisting with the down payment? These are questions that come up in the course of a transaction. And in what type are market are they more common? Keep reading to understand what seller concessions are.
What buyer closing costs can be covered by seller concessions?
In a seller’s market seller concessions were frowned upon and made an offer less attractive. When a seller would review multiple offers, those that included concessions were the first to be discarded. As we transition toward a balanced or buyer’s market, seller paid contributions or concessions are gaining more acceptance. Buyers welcome them in a couple of ways. First, a thorough prequalification with a lender may reveal that the buyer is short of the necessary closing costs and will need assistance from the seller.
A credit towards closing costs in lieu of repairs?
Second, it could be advantageous to the seller to offer the buyer a credit or contribution toward closing costs in lieu of repair. This can be a very beneficial arrangement, especially when the seller is out of town and the close of escrow is right around the corner. The buyer and the seller agree upon an amount or credit that will go toward closing costs in lieu of repairs.
Lastly, a buyer and seller should recognize that seller contributions or credits can be applied toward discount points or an interest rate buy down. Especially in this environment where a buyer’s ability to afford a mortgage has been hampered by higher interest rates, paying for discount points may be a better option than a price reduction.
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