National Agents: What is a seller subsidy?
On the first page of the Sales Contract under the “Sales Price” you have “Seller Subsidy.” This is money the seller will contribute to buyer at settlement for buyers closing costs. So in effect its less money the seller will net.
If you are a buyer’s agent, it’s better for the buyer to leave sales price at full price and have lender give you the amount of closing costs and have seller pay it as a seller subsidy. (it can only be used for closing costs- not down payment) The other option is reducing the sales price a little which means over 30 years, saving buyer about $5 per month. Not worth it. Better for buyer to get closing costs paid.
If you are the seller’s agent, Whether buyer contract offer asks for sales price reduction of $5,000 or seller subsidy of $5,000, it does not matter to seller because the net will be the same.
Note: If the house has multiple offers you should not use any price reduction or seller subsidy, but in fact use an escalation addendum.
This has been another exciting “Training in a Minute“!
Keith