"I'm not paying for their lender title insurance, they can pay for that themselves!"
"But remember, you agreed to when you agreed to help the buyer with some of their closing costs and prepaids."
This was a client Realtor discussion over the phone recently by an agent who had a mail out closing for a seller. The deal was very long and drawn out due to the nature of the sale and lender "needs". But once the deal was nearly done, maybe because it had been so long since the buy/sell was agreed upon, the seller just had a hard time wrapping their mind around what all of the costs on the settlement statement mean.
I can't blame them, it's somewhat a bunch of gobblety goop. Thank goodness, most of the time, the closing agent can sit down in a third party way and explain what the heck all of the settlement statement items mean.
Whatever net sheet for the cost of a sale a Realtor prepares for their seller client, the seller must keep in mind that the numbers are estimates, based on a sales price which is still unknown, for sure. Some numbers just can't be pinned down until there is a closing date in mind, such as:
- payoffs for first and second mortgages
- taxes
- HOA fees
- any ongoing daily or monthly fees that will transfer to the new owner on closing day
The Title Insurance Policy is determined by the final purchase price, which may include seller paid closing costs.
Commissions are determined by the final purchase price as well.
If the seller agrees to pay $3,000 of a buyer's closing costs, those costs will come out of whatever the purchase price is. When a seller looks at their settlement statement, it will have their costs to close as well as $3,000 of costs that the seller will pay for the buyer. Most of the time, no one really knows which of the buyer's closing costs will be included, and to what degree, until the lender and the Title Company Closing agent agree to them. That agreement may not be until the day before closing.
The contracts used for listing a home and purchasing a home are the agreed to directions for how the settlement statement will look. When you're the seller, you won't pay for the buyer's lender title insurance policy, unless you agreed to help them with closing costs in your buy/sell contract.
Don't worry, there is a whole bunch more to the settlement statement than I've mentioned here.
The Quilting Realtor
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Many Dream Of Living In Montana I'm One of the Lucky One's That Already Do! Wanda Thomas Call or Text 406-698-8640 for help with all things Montana. |
Hi Wanda,
So let me understand this, the seller originally agreed on $3,000 total costs, right? Then didn't want to pay for buyer's title insurance? In the long run does it make a difference "what" the cost were as long as they didn't exceed the $3,000?
I agree with Lynda. On the seller side of the HUD, it should just say $3,000 credit to buyer for closing cost. Who cares how the buyer uses the money.
Hi Lynda, yes the seller agreed to pay but then they just couldn't understand how come the closing costs for the buyer showed up on their side of the HUD. I think the agent struggled to explain the HUD to the seller, because the seller was not able to wrap their mind around the numbers. Some people just struggle.
Amiri, that would be so much easier if the seller side just said credit for buyer's closing costs of $3,000.