In a real estate transaction, the term ‘seller assist’ refers to a financial arrangement between the seller and the buyer. It is a common practice in the real estate industry where the seller agrees to assist the buyer with their closing costs or other related expenses.
When a buyer purchases a property, they not only have to pay the purchase price but also incur various costs associated with the transaction. These costs can include loan origination fees, appraisal fees, title insurance, and more. Seller assist provides the buyer with a financial boost by allowing the seller to contribute towards these costs.
There are certain limitations and guidelines when it comes to seller assist. The amount of assistance the seller can provide is usually limited to a certain percentage of the purchase price. This percentage varies depending on the loan type and the lender’s guidelines. For conventional loans, the seller is typically allowed to contribute up to 3% of the purchase price, while for FHA loans, the limit can go up to 6%.
It is important to note that seller assist does not mean the seller is giving away free money. The assistance provided is usually factored into the purchase price of the property. For example, if the agreed purchase price is $200,000 and the seller agrees to provide 3% seller assist, the actual purchase price would be $206,000.
One of the main benefits of seller assist is that it can help buyers who are struggling to come up with the necessary funds for closing costs. By reducing the amount the buyer needs to bring to the closing table, seller assist can make homeownership more accessible to a wider range of buyers.
However, it is important for buyers to consider the implications of seller assist. While it can provide short-term financial relief, it may result in a higher purchase price and potentially higher monthly mortgage payments. Buyers should carefully evaluate their long-term financial goals and consult with their real estate agent or lender to determine if seller assist is the right option for them.