The infamous VA No-No
You want this purchase to be:
- No down payment.
- No out of pocket too
While this is a difficult feat to pull off in a competitive, multiple offer, seller’s market. It’s very common in a buyer’s market.
The key is asking for the right amount, not too much, not too little. You need to be Goldilocks.
Asking for too much seller credit – Bad
If you negotiate for the seller to cover $5,000 of your costs and those costs only come in at $3,000, what happens to the other $2,000?
Do you get it? After all, you negotiated for the seller to give it to you, right?
NOPE… The seller gets to keep it.
Worse. You could asked for $2,000 less in seller credit, and paid $2,000 less for the house. They seller would have made the same amount.
End result of asking for too much seller credit – You overpay for the house and the seller gets your money.
Asking for too little seller credit – Worse
If you negotiate for the seller to cover $3,000 of your costs, and those costs come in at $5,000, where does the extra $2,000 come from?
That money is coming from YOU.
What if you don’t have the money. Then you probably don’t get your house.
Isn’t there just a rule of thumb you can use?
No. No, and No. As in, don’t even try. Anyone that tells you otherwise is setting you up for failure.
Why… Each offer is different. Things like property taxes vary from house to hose, and can swing your closing costs by thousands.
Yes, you can have $4500 in costs on one property and $5500 in costs on another – on the same day – for the same purchase price.
How can you get a hyper accurate number?
Work with a lender that is:
- Anal retentive
- Hyper vigilant about setting realistic expectations
- Willing to be responsible if they are wrong
How accurate is my cash to close estimate
They should be able to send you an estimate on your total cash to close requirements, for each and every property.
- Get the number to use for seller credit from your lender
- Better to round up, than down. We normally recommend going up to the next $500 amount
- Realize nothing is perfect and the market can move
- Having a little cash on standby is a good idea.
Agents – how to write seller credit into the contract
What is the most seller credit I can get?
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Information accurate as of publication date; the views, articles, postings and other information listed in this section are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation. The material in this section is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.
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