So, what is a home buyer’s credit anyway? A home buyer credit is where the buyer of any home receives a monetary or cash rebate, money. Sometimes in the form of a check at the sign off when closing escrow. Money you can use for whatever your heart desires.
Home buyer credits come in three different forms.. The third falls into the new construction arena. We will have to talk about that another time. For now, let’s focus on residential home resales (your typical home sale).
One of the most popular buyer’s credits is the one made by the Home Seller. These credits are commonly called closing cost credits or seller’s closing cost rebate. Remember, every Real Estate sale has some form of expense or cost to close. Some expenses reoccur and some are a one time fee within the title transfer. Known as reoccurring and non-reoccurring closing costs.
An example of a one time fee (non-reoccurring) would be the loan origination fee. These are attached to the cost of your loan and, often, are the most expensive. Thank goodness they’re a one time fee..
An example of reoccurring fees would be Hazard Insurance, Property Taxes and HOA dues. These are fees that you will be paying year over year.
A seller may accept an offer where they are asked to pay some or all of the non-reoccurring closing costs. This is a very important point of negotiation and should be considered as a leverage point for other terms written into a residential purchase contract (RPA).
The second form of a credit may be offered by or negotiated with the Lender/Broker or Realtor you are working with. Do not expect to gain a credit of this sort if you haven’t negotiated it at the onset of the loan application process or when your residential purchase agreement is written.
One way we have been successfully helping buyers get the home of their dreams is to offer a Buyer Rebate Credit program. The amount is dependent upon the compensation offered from the seller.
Imagine if you were expecting a $2500 check at the close of escrow! How would that help?
You could use that money for a new Refrigerator or a Monster Flat Screen TV!
How about offering $2500 more than the other buyers bidding against you? Could that help you get your dream home? You BET it could! Do you want a check at closing?
We find that simply asking for credits or rebates is an effective negotiation strategy. It opens the door to numerous other options that are rarely, if ever, considered by the home seller or their agent. The key is to seek out the many ways a purchase contract and financing can be structured to benefit you.
I welcome the opportunity to further help educate you in the different ways you can get the most purchase power. Take a minute and use the contact form below or discuss this with your chosen Realtor.
related links:
- New Ways to Save Money when Buying or Selling Homes
- Don’t Sign a Buyer Broker Agreement
- How Buyer’s closing cost can cost you
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