Posted by Tim Fierro (Tacoma, WA) on February 22, 2002 at 23:36:37:
One way this could be done is as you have guessed. Something along the lines of;
Seller agrees to contribute 3% towards XXXX charity/downpayment/program.
Seller agrees to contribute up to 3% towards buyer’s closing costs and any prepaids.
So you as the seller agree to 3% for their downpayment assistance type program, and you are paying for up to 3% of their closing costs.
But these programs have fees, you will have a higher excise tax for a higher price on the house, and you will have a higher agent fee for his/her commission.
Assuming you raise the price of the house from $125k, up to $135k, you might be ok. Approximately numbers: $600 for extra agent fees, $4050 for downpayment program, up to $1350 for fees with charity program, $4050 in closing costs paid by you, and maybe $180 extra for excise tax; would total about $10,230. Subtract from your new price of $135k leaves you at $124,770. These numbers are approximate.
So you could give these ‘concessions’ in the above format and still get your price you want in cash. However, will the home appraise for the bank for that extra $10k?
And you are right, you are paying for the extra fees in the raised price, so make sure you are getting reimbursed if you go this route or you might end up with less than the $125k you are asking.