Is it better to have the seller pay closing costs?

"I want the seller to pay the closing costs, don't I?"  That is a question I get from both first time and experienced buyers.  And my advise to them may not be the same as other agents, but after you read what my advise is and the WHY behind it, perhaps you will change your mind about it too. 

With it being the rare exception buyers and lenders are the only ones who come to the closing table with money.  In my 20 years in this business I can count the time seller brought funds to the table on one hand.  So lets talk frankly about the sellers paying your closing costs.

When a contract says sellers will contribute $X for purchaser closing costs then the seller looks at your offer and if it works into the net he is willing to accept he generally agrees.  But you can bet your sweet bippy that if you offered that same $X less for a purchase price with the seller paying no closing costs he'd still take your offer. 

Buyers and lenders fund closings.  So if you have the savings to pay the down payment and closing costs, that's your best bet.  If you fall short of having enough funds to pay the down payment and your closing costs is the only time you should ask for seller assistance.  Because I'll say it again buyers and lenders fund closings.  So if you pay more for the house in order for the seller to "pay" some of your closing costs it's really like financing your closing costs for the life of the loan.  That's right, you heard me, you're not only still paying them yourself, but you are borrowing the money from the bank to give to the seller first before he gives it back to you to pay the closing costs. 

Now does that make any sense to you at all?  So again, it's ALWAYS my advice if you have the funds to make a down payment and pay the closing costs that you do not ask for seller contributions.   Because the buyer comes to closing with a check, the lender sends funds and the sellers leave with a *check. 

*Short Sales are not included in this scenario, those sellers do not leave closing with a check.

So what are your thoughts of buyers asking sellers to pay closing costs?

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Comment balloon 47 commentsTammy Lankford • May 25 2012 11:20AM


The exception to this rule? If the seller has to pay a transfer tax on the sale of their home. Got hit with THAT one when I sold my first home in Washington state. Even worse, it was a surprise at the closing table! How much I've learned since then. :-D

Posted by Mary Elizabeth Allen almost 3 years ago

Buyers pay transfer tax in the state of Georgia.  And it's very low, $1.00 per thousand.  But I certainly wouldn't like a surprise at the closing table and of course I realize all states do things differently.  Thanks for stopping by Mary Elizabeth.

Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago

Hi Tammy, excellent blog, I agree with your comments and thanks for sharing with us in Active Rain Land.

Posted by Ronald DiLalla, No. Orange Cty Real Estate (Century 21 Discovery DRE 01813824) almost 3 years ago

Tammy- I am seeing about 60/40 here in my neck of the woods on sellers paying closing for the buyer. 60 being they do. That is one of the challenges of todays buyers especially for the first time buyer in our area where closing costs are at the high end.

Posted by Martha Brown, Your Homes Around Annapolis Agent (Long & Foster Real Estate, Inc., Annapolis MD 21403) almost 3 years ago

Tammy, as a general rule, I agree with you. Of course, there ARE exceptions, but you're right!

Posted by Donald Reich (Prudential Centennial) almost 3 years ago

Tammy ~ New York State Closing costs are just way too buyers do put them into the mortgage, or wait to save up the money to buy.. Between closing costs and the downpayment, it is a good chunk of change. Real Estate being local certainly has a different way of making things happen. I would prefer them to have that cash up front!! taking it out of the deal.. Not everyone can go forward though with out it.

Posted by Janis Borgueta, LIC RE Salesperson - Hudson Valley Homes for Sale (Key Properties of the Hudson Valley ~ 845-527-7115 ) almost 3 years ago

I hear you and agree.  We never have anyone ask for closing costs from the seller unless they are from out of the area.  In my secondary market they will sometimes ask for a sellers concession to help out but then it is very difficult with the appraisal.  

Posted by Liz Wallace, Broker C21 Sherlock Homes, Rockville Centre, LI, N (Century 21 Sherlock Homes) almost 3 years ago

Liz- ah yes, the appraisal can certainly play a part

Janis- my point is needing and asking are two different reasons.  Just to "want" seller contributions for the sake of "getting more" from the seller is just stupid.

Donald- clearly there are reasons, but financing closing cost if you are getting loan when you not have to is not smart.

Martha- I think I'm going to do a post about closing costs and use some numbers.  Perhaps Ill ask my lender to help me out.

Ronald- you bet

Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago

Tammy:  In a perfect .. straight-forward world, I would agree with you.  Buyers paying their own closing costs ... and having saved them prior to entering the homebuying process ... would be best.  But, that said, I think the sellers paying closing costs CAN make sense ... this action can help to facilitate a sale and get a market moving and provide other much needed assistance to the buyer.  It is NOT the only answer and the only option to be considered.  It is NOT the right thing to do in every case.  Nothing is always the right answer.  This, as with many other options, depends on the individual sale and the individuals taking part within that transaction, as to whether it is the right action to take.  THAT should be a very important portion of the lender's contribution and service in the process ... their expertise, knowledge, and ability to show varying options available to a buyer regarding their purchase.  Ultimately it is the decision (most times) of the buyer themselves as to how their contract reads, how they proceed, and how their financing is cemented.  But it should be an option on the table for discussion, just as all options are ... JMO ...

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Posted by Gene Mundt, Chicago-area Mortgage Lender -, 708.921.6331 - 37 yrs experience (NMLS #216987) almost 3 years ago


I said:  So again, it's ALWAYS my advice if you have the funds to make a down payment and pay the closing costs that you do not ask for seller contributions

I currently have a first time home buyer getting a FHA and we asked for the 6% allowed.  He didn't have the funds.  Yes, I believe it makes sense sometimes.  But if the buyer is sitting on liquid cash in the bank it makes no sense to me.  I recently had a buyer who wanted to getting getting .75% interest on her savings and pay 4% to borrow that same amount of money just to "get more" from the seller.  That does not make sense.  I'm only talking about WHEN the buyer has the funds. 

And thanks for the feature.


Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago

When I represent the seller, and it's not a short sale, I generally make the buyer add the closing cost request to the sales price and then cross my fingers it will appraise, LOL. It's very clear then that the buyer can see that they are paying for their own closing costs by financing them.

I believe it's much better to pay your own closing costs. In fact, when I refinanced my home to a 15-year a few years ago, I paid my own refi costs out of pocket. Why would I want to finance them? Just because that's the way many people do it doesn't mean it's the smart way to do it.

Posted by Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents, Put 40 years of experience to work for you (Lyon Real Estate) almost 3 years ago

I have friends that re-fi'd twice as rates moved down rolling costs in both times.  I swear they didn't save a dime.

Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago

Tammy, your advice is good.  Buyers think they are getting something from the seller.  I've noticed so many don't want to bring any more cash than they have to -  they're just happier keeping it in their pocket, even when it doesn't make much sense

Posted by Mary Douglas, REALTOR, Red Feather Lakes, Colorado (United Country Ponderosa Realty, Red Feather Lakes, Colorado) almost 3 years ago

Tammy, This is what I always tell my buyers too.  They are simply adding the closing costs totheir loan if they have the seller pay them.  

Posted by Judi K Barrett, Broker/Owner, Integrity Real Estate Services -IDAB (Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma) almost 3 years ago

I have never had an instance here where sellers have paid closing costs.  It just doesn't come up that much in my market.  Interesting to read how things work around the country.  But psychologically it would seem the better way not to ask the seller for money.  Let them walk away with "all" of it.

Posted by Jane Peters, Connecting you to the L.A. real estate scene (Power Brokers Int'l) almost 3 years ago

It does seem to be based on the individual market.  Seller paid closing costs for buyers in Georgia seems to be the norm rather than the exception.

Posted by Kathy Sheehan, Senior Loan Officer (Cross Country Mortgage Corporation 770-634-4021) almost 3 years ago

Tammy -
I agree financing the closing cost in to the purchase is paying for something over 30 years, that can be wrapped up today,

Posted by Steve Loynd, 800-926-5653, White Mountains NH ( Alpine Lakes Real Estate Inc., ) almost 3 years ago


Great post as always, I see the point.

Most of the time a home warranty is paid by the seller here in my area and yes your right that it is indirectly paid by the buyer by the "seller accepting the total net balance". 

Posted by Pete X with X Group Real Estate Advocates, Huntington Beach, CA 714.459.2017, Outstanding Agent Referrals-Nationwide (Investments to Luxury) almost 3 years ago
It is rare to have an offer where there is no Seller closing help here.
Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge almost 3 years ago

Tammy, you are so right - in most cases, the only people who have money is the lender and the buyer - so why to pretend this 'closing cost credit' anyways?

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (Keller Williams Realty) almost 3 years ago
With interest rates being at all time lows, I think the principle of Leverage is the way to go !!! When rates held back up to 6-7 this will be real cheap money !
Posted by Michael J. Perry, Lancaster Relo Specialist (KELLER WILLIAMS of Central PA) almost 3 years ago


Not to mention the chance to appeal the property taxes at a lower sales price and perhaps save some money year after year.

Posted by Richard Weisser, Richard Weisser Coweta Newnan Homes for Sale (Better Homes and Gardens Real Estate Metro Brokers) almost 3 years ago

Tammy, Since we're usually repping the sellers, the buyers can ask and the sellers will pay as long as the net price is met.  So far, no problem with appraisals being met.

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 almost 3 years ago

Great post Tammy.  If my buyers have the funds, I normally advise them to pay their own closing costs.  Unfortunately most of them don't.  Congrats on the feature and I enjoyed this post.  

Posted by Amanda and Jared Christiansen, Realtors and Broker Associates, Century 21 Bradley (Century 21 Bradley (260)704-0843) almost 3 years ago

We ask for closing costs, but it's always a negotiable item in the offer.  What I'm finding these days is that with the loss of equity across the board on nearly all real estate in these United States, some sellers just might not have the wiggle room in their net to contribute what the buyer is seeking.

Posted by Carla Muss-Jacobs, Principal Broker/Owner, Buyer Focused ~ Buyer Results ( | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time) almost 3 years ago

Mary- not to me anyway, but they sometimes listen to me and other times.... not so much.

Judi- that's how I see it.

Jane- that doesn't surprise me about your market.

Kathy- not at all the norm with my buyers

Steve- :)  And I just love looking at the baby bear cubs every day... thanks again.

Pete- think about who brings money to the closing... they fund everything.

Cheryl- out of need or perceived greed though.

Praful- I think when it's needed to be rolled into the price and financed it's acceptable, but when it's not needed, it's just not smart.

Michael- I think paying how and saving on your mortgage every month and putting that money in the bank will be your best bet in the long run, no matter what the rate is.

Richard- another great point.

Bliz- I just had one that barley squeaked by (appraisal) with a full 6% seller contribution for FHA.  I was worried.

Jared and Amanda- good advise I say.  And I have been known to counsel people to save more money before they try to buy a house.

Carla- but it is ALL the buyers money to begin with (or their lender) and when there is financial need it's a good thing to get the house sold, but they they ask for the sake of "getting more" from the seller it doesn't make sense.



Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago

I worry about appraisals too so when I represent sellers...I try to leave them out 100% of the time...

Posted by Cindy Marchant, "Cindy in Indy" , Realtor, Fishers Real Estate (Keller Williams Indy NE 317-290-7775 almost 3 years ago

Great post. My thoughts fall in line with yours.

Posted by Dale Samples, REALTOR -Homes for Sale Charleston, West Virgini (304.741.4705 • ) almost 3 years ago

Tammy - we often see first time homebuyers requesting sellers to pay closing costs. This is often the only way they can purchase the home. Since we list concession in the closing section of our MLS, we can see when this is customary in particular subdivisions and price ranges.

It does amaze me when I have buyers who don't need seller paid closing cost asking for them.

Posted by Carla Freund, Raleigh - Cary Relocation & Luxury Home Specialist (Keller Williams Preferred Realty) almost 3 years ago

Over 75% of buyers ask for some sort of seller financing on lender deals AND lower the asking price in the process.

Posted by Robert L. Brown, Grand Rapids Real Estate Bellabay Realty, West Michigan ( almost 3 years ago

Cindy- as prices are not creeping ever so slowly up I have that worry as well.

Dale- :)  great minds

Carla- my thoughts on that is that some of those folks don't need to be homeowners if they can't save enough money to do that.  When I purchased my first time I waited until I had 20% so avoid mortgage insurance and I paid my own closing costs.  If everyone didn't think they should get a home right now we might not have gotten into the housing crisis.

Robert- is that 75% of YOUR buyers, cause that's certainly not the number in my office.

Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago

Tammy - So often buyers want their closing costs paid and don't see that they're financing them over time.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) almost 3 years ago


The seller paying the buyers closing costs, in lieu of an equal discount could be looked at another way, the buyer is financing the closing costs.  They are also paying interest on that extra 2%-3% for the life of the loan.  If this is what they need to make the deal, and they fully understand then why not if all agree. 

Lender's paying the buyer's closing cost through a rebate and higher rate is effectively the same thing.  Whatever the deal needs to make it work out, provided they parties all understand what they are doing and why. 

Posted by Dan Tabit (Northstone Real Estate Inc.) almost 3 years ago

Sellers must look at their net. Buyers must look at what they can afford. As you have said, if buyer can afford to pay the closing costs, they should do so. It is simper over all and cheaper in the long run for the buyers.

Posted by John Juarez, CDPE, ePRO, SRES, GRI, PMN (The Medford Real Estate Team) almost 3 years ago

Tammy:  Glad to hear that your current clients are working it out in a way that fits their needs best ... or at least trying to.  What I was trying to get across (and evidently didn't do very well) was that each individual situation must be assessed for .. and on .. its own merits.  So, I guess we agree on that.  My job as a lender is to examine all options to see what the best "fits" are ... and then present those options to my clients for their decision.  You're exactly right, sometimes the situation just isn't a good fit for the clients involved ... or makes no sense.  And exactly right too ... that the professionals involved must be educated and advocate for their clients.  Where you and I come in, right?  Like the new pic ... and glad I could "feature" you ...


Posted by Gene Mundt, Chicago-area Mortgage Lender -, 708.921.6331 - 37 yrs experience (NMLS #216987) almost 3 years ago

Everytime our lenders pre-qual somebody, it seems they want me to get the buyer closing costs. I can't do it. Nothing appraises out.

Posted by Terri Poehler, Coral Springs Real Estate Agent (Realtor) almost 3 years ago

Tammy, you are one smart cookie, and I have to reblog this...

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) almost 3 years ago

All you are saying is true and that paying closing cost is not what the seller wants to do.

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) almost 3 years ago

It ia very clever post. In Florida on cash transaction it is customary that the Seller pays all closing cost, every penny of it. The buyer of a $500K home often (depending on the Title Company) wil pay only recordong fee for the deed, which, if 2-pages long, would be $18.50.

Is it built in price?

It sure is.

Posted by Jon Zolsky, Daytona Beach, FL, Selling Daytona paradise for heavenly good prices (Daytona Condo Realty, 386-405-4408) almost 3 years ago

I agree...a good offer made with no request for closing costs assistance will usually look really good to a seller.

Posted by Lisa Hicks, Kennebec County Real Estate Agent, Central Maine R (The Maine Real Estate Network) almost 3 years ago

Its so rare other then in cash transactions that the buyers dont ask for closing costs from my experience.

Posted by Chuck Carstensen, Minnesota Real Estate Expert (RE/MAX Results) almost 3 years ago

In my market almost every deal has some buyer closing costs being paid by the seller.

Posted by Dr. Stacey-Ann Baugh, A doctor who makes house calls. (Century 21 New Millennium) almost 3 years ago

Thanks for the post, hope you don't mind I reblogged it. Lots of information to consider.

Posted by Diana Foster, Realtor- Helping you find the perfect home!! (Braselton Real Estate Group, Inc.) almost 3 years ago

Tammy, I agree that buyers should be prepared to pay their down payment and own closing costs. It makes their offer more attractive to a seller. Buyers can stack closing costs on top of the purchase price, but like you said, those costs are being financed in to their loan. Excellent post,

Posted by Pamela Seley, REALTOR®, CA BRE #01824145 Real Estate - Call 951.491.4063 (West Coast Realty Division) almost 3 years ago

Hi Tammy, thanks Pamela for re-blogging this.  We tell buyers that even if their net is the same some sellers resist paying cloing costs just on principal!

Posted by Stephanie/Bob The Ruiz/Miller Team, The Ocala Dream Team (Keller Williams Cornerstone Realty) almost 3 years ago

Hi Tammy,

It sounds like you do not work with a lot of minimum down FHA first time home buyers.

Your entire post makes no sense for them, as paying the buyer closing costs is not an option.


Posted by Phil Leng, Phil Leng Team - Residential Real Estate Experts & (Keller Williams Eastside Market Center) almost 3 years ago

Phil- actually, it is an option.  They can wait to purchase a home until they they have savings for closing costs and savings to fix that major thing that can go wrong after a home purchase.  And more and more these days I find myself with young buyers counseling them to do just that.

Posted by Tammy Lankford, Your Lake Sinclair Expert (706-485-9668) (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 3 years ago