What are Seller Paid Closing Costs? How do they work?

Many of my buyers and sellers have heard of “Seller Paid Closing Costs” but they don’t know exactly what that means.  I would love to help with that.

When a Buyer requests the Seller to “Pay Buyer Closing Costs” within an offer to purchase a home, it means they are asking the Seller to use part of the proceeds from the sale of their home to help the buyer close the deal.  This has become very common in our market.

Basic Simplistic Example:

House Sale Price is $225,000 (that is the median price of a home in the Twin Cities)

Buyer Offers full price asking 6% ($6,750) in Seller Paid Closing Costs

Actual Price Seller is getting for the home is $225,000 – $6,750 = $218,250

In essence, the Buyer is financing the closing costs or rolling those closing costs into their loan.  Another way to do this is for the Buyer to add those closing costs on top of the House Sale Price $225,000 + $6750 = $231,750. In this case the House Sale Price would be $231,750 and the Actual Price Seller is Getting for the home is $225,000



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