Buying a home is typically the largest investment an individual or family will ever make. Because it’s such a significant investment, there are a great many details and facets that go into the purchase, the financing and the closing. Seller assistance is a concession buyers can request and a tool sellers can use to smooth a transaction and ensure the deal closes in a way that benefits all parties. Have you been wondering if you should offer seller assistance? If so, here’s a look at the pros and cons, as well as key decision factors between seller assistance or lower price.
Pros of Seller Assistance
Selling a property isn’t always as easy as the homeowner hopes. In an ideal world, you’ll find an eager buyer who is ready to pay cash for your home, and there’s no worry over the financing, appraisal or other factors. But, in reality, it’s sometimes difficult to find a highly qualified buyer — especially when selling during winter months or other times of year when hitting the market isn’t as attractive as springtime.
Seller assistance can be used to transform a borderline buyer into a prime buyer. This is especially true when seeking to sell your home to a first-time buyer. Perhaps that first-time buyer has plenty of money to cover a monthly principal and interest payment, but he or she is a little short on closing costs. Seller assistance can be a good way to help them qualify and to move your deal forward.
Also, in a tough market for sellers, seller assistance can be a nice way to sweeten a deal. Maybe a buyer is just a few thousand dollars short of reaching a 20 percent down payment, which would then prevent the need to pay private mortgage insurance, or PMI. Seller assistance can be used to help them reach that 20 percent threshold and avoid the monthly PMI obligation.
Cons of Seller Assistance
Seller assistance isn’t a tool that sellers need to use if the market is hot and buyers are beating down their doors. Of course, you can raise the price and provide seller assistance, which balances out the bottom line payout for the home, but this can create other issues (see more below) that could complicate a home deal.
A home transaction is all about leverage, give and take, compromise and deal-making. Seller assistance is a tool you can keep in your toolbox and deploy when needed to make sure your home sells in a timely fashion. But, if you’re swamped with interested buyers, it’s best to keep that tool in storage.
Lower Price vs. Seller Assistance on House
When it comes to financing a home, an appraisal means a great deal. A bank isn’t going to offer a borrower $300,000 to buy a home if that home appraises for only $250,000. That’s a complicating factor when it comes to seller assistance. If you bump up the sales price to balance out the offering of seller assistance, the sales price may rise too high for the bank’s comfort. This could thwart a deal.
This could be the case even if you’re just offering seller assistance as a sweetener. Appraisals are finicky things, and they don’t always come back at the number you would like to see. If you’re not getting the appraisal amount you need to sell your home to the buyer you have, it’s best to skip seller assistance and just lower the price.
Who Can Help You Decide?
Making decisions around home sales can be challenging. If you’re buying or selling a home in York, PA, make sure you have expertise on your side when you choose to work with CENTURY 21 Core Partners. Our team of real estate professionals knows the York market inside and out, and each can provide expert guidance as you make pricing decisions and as you consider seller assistance.
Contact us today to speak to one of our real estate experts.