Asking The Seller to Pay Closing Costs
Please note: During times when there is a strong "seller's market" this practice is abandoned due to the availability of so many more attractive offers.
It has become common to ask the seller to pay some or all of the closing costs when you purchase a home. Essentially, this is financing your closing costs since you will probably pay a little bit more for the property than you would if you were paying your own costs.
The best way to approach this is to first agree on the purchase price for the home. THEN, go back to the seller and ask to raise the purchase price by the amount of your closing costs, and to give you a credit for the closing costs. This negotiation tactic separates the emotion of the purchase price from the decision to pay closing costs.
Keep in mind a few simple rules. If you are putting ten percent down or more, the most the seller can contribute is six percent of the purchase price. If you are putting less down, the most the seller can contribute is three percent, except on FHA/VA, which allows up to 6% on most transactions.
On VA loans, you can ask the seller to pay everything. This is called a "VA No-No," meaning the buyer is making no down payment and paying no closing costs.
On FHA loans, the seller can pay almost any cost, but the buyer has to have a minimum three percent investment in the home/closing costs.
Most refinances include the closing costs and pre-paids in the new loan amount, requiring little or no out-of-pocket expenses to close the deal.