Closing Costs... I get. But Downpayment WTF?

[Deleted]

I was watching "My first Place" on HGTV and this couple was asking the seller to pay for their downpayment. I was like really?

I get the closing costs and some of you explained it to me. But asking for the downpayment too? WTF?

And of course since it was on HGTV they got it, but I am thinking how would that have played out in real life? Would a loud "HELL NO" be the answer?

Edit: they asked for the 3% downpayment and 3% closing costs.

[Deleted]

There is something called the Nehemiah Program that provides "grants" to home buyers doing FHA loans equal to 3% of the down payment and 3% of the closing costs. These grants were actually funded by the seller, and the Nehemiah Program administered them. In the "good old days," the seller recouped by raising the price. That, I imagine, will have changed and is simply a discount. I wonder if the buyers on the show you were watching were doing this.

[DVM gone riding]

my parents essentially did this. They carried 10% of the contract to act like a "down payment" so the bank would loan the rest of the money, and yes they increased the price and charged "interest" on the "loan" they got some of the money but the buyer hasn't paid anything in a while. But they also figured they only needed to recoup a little bit of it so essentially it was a wash for them, they made money still on what they got from the bank for the house. They could put a lein on the place but in order to get the money then the house would have to sell.

[Deleted]

The asking was 250K, they offered 244K plus the 3% downpayment and 3% closing costs.

They offer was accepted. So the seller not only lowered his price by 6K but was also out $14,640 for closing and downpayments.

[Sum Dum Gai]

I get the closing costs and some of you explained it to me. But asking for the downpayment too? WTF?

The market is crappy right now so the buyer knows they can get away with lower offers. Why wouldn't you ask for the lowest possible price and negotiate up from there?

[Deleted]

My coworker is trying to sell his place right now. Yesterday they got offered $40,000 under asking plus they pay all closing costs - around 17% total under asking price. Lucky for them, they aren't in a hurry to sell. They wanted to just completely reject the offer, but their realtor convinced them to counter $5000 under asking to see if they really have interest.

[Deleted]

It sounds like they made an offer of 230K and the sellers felt that was good enough. All the other numbers and what is being done with what money would just be noise to me, if I was the seller. As long as the house could appraise for the amount needed and the buyers could qualify for the loan. They could want 3% back so they can put up pink zebra wall paper, what do I care.

[Deleted]

What Pooks said . . .

I offered $142,500 on my house in 2006 with the seller paying $2,500 toward closing closts. Back then, that actually covered the closing costs plus some (no junk fees or origination fee, etc.)

At closing, she protested because some of that was used toward my half of the home warranty I wanted (we split it . . . 1980s house). I honestly came close to saying, "Didn't you realize that I wanted to pay $140,000 for this house but included my closing in the offer?" Duh.

[2kids10horses]

We just sold a house I purchased last summer to fix up and resell. The Buyer wanted us to pay $5000 towards their closing. But in the language of the contract, it says it can be used for establishment of escrow. So, their true closing costs didn't come up to $5,000 so we in effect paid some of their insurance and taxes that had to be paid to create an escrow account.

Yeah, it's annoying.

But, I just see it as a cost of doing business.

[Deleted]

Yes, 2kids . . . that was the situation my seller was in. Sellers just need to figure out the bottom line and not worry about whether it goes to closing or whatever.