Posted by Ken (in Iowa) on July 31, 2003 at 19:22:49:
In most cases, (and in every case in which I have been the seller when these programs have been used) the price of the home is increased by the amount of the down payment to offset the “service fee” that the seller must pay. Of course, the home must appraise for the higher amount or the deal would need to be restructured in some way. The advantage to the seller is that it opens the market for his home to a whole new set of buyers - those without the funds for a down payment!
In your case, assuming that you are the buyer, you can make your offer at or close to the seller’s asking price (assuming that makes sense to you - you have to be the judge of that) and ask the seller to include the cost of the service fee. In a lot of cases, the seller would accept the net price you are offering anyway. If not, you can always add the cost to his or her asking price if you want the house enough.
Hope this helps - good luck,
Ken (in Iowa)