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How to Write the Best Purchase Agreement & Get the Seller to Pay Your Closing Costs

Once you find a home that you want to purchase, you will be required to put your offer in writing in the form of a Purchase Agreement. In order to get the most out of your Purchase Agreement, it needs to be written with your best interest in mind and we’re going to walk you through how to do that.

Sellers Concessions

Seller’s concessions are where the seller is willing to forfeit a percentage of the purchase proceeds to go towards your closing costs. These concessions usually range from 3 – 6% of the purchase price which can add up to a lot of money.

In most cases 3% concessions is enough to cover a good portion of your costs leaving you to come up with very little at closing beyond the down payment required for your mortgage program. 6% concessions would definitely cover all your mortgage related costs as well as buy down your interest rate resulting in more of your money saved.

In this current housing market, I would personally try for the largest amount of concessions you can get. In fact, it’s important for you to remember that when buying a home, it’s a negotiation. Your first offer may be rejected, countered or accepted.

Even if the offer is rejected or countered, you can simply make another offer. However, when you make your next offer you may have to give a little to get the seller to accept it. To help you better understand how to structure your offer with seller concessions, I’m going to provide a few different scenarios for purchasing the same home.

Negotiations & Writing Your Offer to Purchase

For the examples below we are going to put an offer on a home listed for $150,000. If we offer $150,000 and ask for 6% concessions, we are actually asking the seller to accept $141,000 and give us $9,000 towards our costs.

$9,000 is probably way more than what is needed to cover the costs, so any leftover proceeds can go towards reducing your interest rate and saving you money on your monthly payment.

However, unless the seller is very motivated, it may be a challenge to negotiate a full 6% concession on their asking price. So that just means you may need to be a little creative with your offer if you think you need the full 6%.

For example, if you think the home will appraise for a little more than the asking price of $150,000, you can offer $154,000 and still ask for the 6% in concessions. This would allow the seller to net $144,760 which is $3,760 more dollars in their pocket and you still get $9,000+ in concessions.

Our average client only needs 3% to make things work but as I stated before the more the better. Mind you, we will be there to walk you through exactly how much in concessions you will need so if you don’t totally understand, we've got you covered! Just call (248) 674-6450 and we'll walk you through it.

To learn more about the mortgage process and other pitfalls to avoid please check out the other blog posts below. I hope you find this information useful and remember you can always call us if you have any questions or if you’re ready to get pre-approved and get the process started.

How to Avoid The Low Rate "Bait & Switch"

The 8 "Must Ask" Questions That Could Save You Thousands in Closing Costs & Help You Avoid a Nightmare Closing!

How to Avoid Paying Any "B.S." Mortgage Fees

How to Find a Good Honest Local Mortgage Broker