A Quick Word on Closing Cost Credits

When a seller pays a buyer's closing costs, what are they actually paying for? Find out today.

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There are a number of reasons a buyer might ask for a seller to cover the closing costs, but is this arrangement really as common as HGTV makes it seem? Yes and no. 

When a seller does cover a buyer’s closing costs, these funds are usually taken out of the total list price rather than paid out directly. 

Sellers cannot contribute to the buyer’s down payment.

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Also, it’s important to realize that down payments aren’t included in these “closing costs.” Instead, closing costs in this case refer to additional expenses like title fees, escrow fees, insurance, and more. 

The reason this distinction matters is that sellers cannot contribute to the buyer’s down payment. The buyer must provide these funds themselves. 

So when a buyer asks for closing costs, they aren’t actually asking that every bit of their closing-related expenses be paid by the seller. 

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.