Belt Auction

Does asking for a 6% sellers concession help or hurt me?

I am hearing opposite responses from my broker and my agent. I have more than what is required for my down and closing costs. My mortgage broker told me that I need to tell my real estate agent that I require a 6% sellers concession for the deal. I agreed as i wasn't sure exactly what that meant. When I told my real estate agent and she said I should look into another broker because that 6% won't allow me to find a home in the time period that I want to do so 2 months. She says it also makes me uncompetitive in the market when other buyers may not require a concession at all or may only require a 3%. My broker is adamant he requires 6%. I found him on zillow.com and he had over 20 (5) star reviews from past clients. But given my real estate agents advice now I'm not sure. I am doing an FHA loan and I have more than the 3.5% down which is required, why do I need the 6% concessions? Is asking a 6% concession in my favor [per my broker] or against it [per my realtor]. I greatly appreciate any advice you can give me.

Public Comments

1. HURTS you. The MORE you ask from sellers, the less attractive your offer is to them. Talk to the lender/broker. He cannot REQUIRE a seller's concession if you have the money for down payment and closing costs. It is IN your favor, in that this is money seller is crediting you at closing, so you have to bring LESS to the the table. If such an offer is accepted, it is in your realtor's favor because the selling price is higher than if the price were reduced and there were no seller's incentives. Your realtor is right to some extent, but over-reacting; I'd consider dumping them anyway if they're so inflexible. From what I've seen, many IF NOT most buyers are asking for seller's concessions, although 6% seems high, seeing a lot at 3%. What happens to this 6% sellers concession your broker insists upon? Does it go to you or to him? 6% seems RATHER steep for him in addition to all the lender payments. Some yahoos are confusing your loan broker with your realtor/agent in their responses.
2. This doesn't sound correct. Your broker says he requires 6%? Have you signed a contract stating that you are paying him? If so, does it state you will pay him 6%? Still does not sound correct, that too high. I get red flags with this Realtor. As a buyer you may have been asked to sign a buyer's contract? If so, read it carefully. If he wrote in 6%, then you tell him to change it to 3% and the seller pays and not you. It could be that you are a little confused. It's ok, real estate is complicated. When I ask a buyer to sign a contract - mine is written such that should the seller not pay a commission, then my buyer agrees to pay me. Doesn't happen often, and in fact in 20 years, I've never had a buyer pay me my commission. Understand now? If you have 3.5% for down payment and 3-4% for closing costs, then the seller does not need to kick in any funds. Read your offer carefully before signing it. Even have an attorney review it.
3. Each offer is different. If the home is already under priced, your offer would likely be rejected if you low balled the price or if you asked for too much concessions. However, if it is priced fairly priced, you may be able to offer the asking price with a large amount of concessions. The more you under bid or ask for too much concessions, the less likely that the seller will accept your offer.
4. Ask your broker why they need the 6% sellers concession. If you have what is required to get the mortgage is this 6% a fee for the broker? Why would a seller reduce their price 6% if the price is already below market value? You base your offer on market sold compariables of similar properties inthe area. Also if you find yourself in a multiple offer situation asking for a lower price is crazy. Maybe find another broker in your area to check things out.
5. I don;t see why the mortgage broker should have any say in the matter regarding closing costs - his only concern should be the mortgage do you also have 3-6% cash for closing costs? - just having 3.5% for down payment is not enough. you will also need cash for home inspection (don't buy without one), termite and radon test - inspection & tests will run you $400-600 total and the seller is NOT allowed to pay all the closing costs anyway by law - if you have 10% cash in all, you should have enough to get the house