Andrew Wetzel's Musings

March 22, 2019

The “Seller Assist”

Filed under: Buying,Hiring an agent,Marketing,Price,Selling — awetzel @ 3:37 PM

When I began my Real Estate career in 1996 the term “seller assist” was relatively new with many sellers viewing it as an option they could accept or reject without affecting the selling process or their proceeds.  While it obviously impacts a seller’s proceeds by reducing the selling price, many felt that they should not provide what is really “closing cost assistance” since nobody helped them buy the house they were now trying to sell.

My office is located in an area that always seems to be a “seller’s market”, meaning that there are more buyers than houses to sell.  Those that are properly priced sell quickly, often receiving multiple offers and exceeding the asking price.  A seller assist used to be a deal-breaker unless buyers added it to the asking price.  Then the housing market changed and appraisal procedures changed making that harder to do.  Many areas practically require that a seller assist with buyer closing costs if they want to sell.  While no one can force a seller to do that, they have to understand that how they respond to a request for a seller assist goes a long way as far as determining whether they sell or not and, if so, how quickly.  A serious, motivated seller has to know their market, meaning their competition, decide whether they are more motivated by time or how long it takes to sell or whether the amount of the sale is the major factor.  A quick sale for top dollar is nice but unlikely in some areas so a seller needs to think about the cost of not selling and how that impacts their plans.  I always tell people that you cannot “time the market”:  many held out for higher prices in 2007 and 2008 only to see prices fall dramatically.  If a seller is going to buy, they will need to consider how the parts fit together.

So, what is a seller assist?  In the past a buyer most likely needed to put 20% down to get a loan.  Over time more financing options became available to handle the growing segment of the population that either did not have 20% to put down or who were unwilling to deplete their savings.  As the Real Estate market evolved it faced a variety of challenges.  For many, wages were stagnant and it became harder to save while prices continued to rise.  While lending rules changed which seemed to hurt first-time buyers the most, those who could qualify for loans often lacked the savings to pay out-of-pocket costs that a loan would not cover.  The seller assist made that less problematic for the buyer while obviously adding a “marketing expense” for the seller.  The type of loan and the amount of the buyer’s “down payment” determine how much of a “seller assist” a lender will allow and there are rules covering which expenses an assist will cover.  For example, a buyer is not allowed to walk away with “unused” seller assist money.  Some agents either do not understand that or fail to properly advise their client which can cause a problem at the closing table.  Also, a seller credit to offset needed repairs can pose a problem and be considered “mortgage fraud”.

Listing agents and buyer agents must educate their clients about pricing and related issues, including the use of a seller assist, so that there are no surprises.  I still see sellers who do not understand this even though many of them had their houses on the market before meeting me.  Buyers may delay buying because they are unaware that a seller may help them with their closing costs.  I would like to think that, given the high percentage of consumers relying on the Internet for Real Estate information, they understand the concept of a “seller assist”.  The fact is that many do not.  Buyer and sellers encounter a great deal of data and information online but do NOT have the knowledge or insight to process it, assuming of course that it is not incomplete or untrue.  The fact is that a seller assist is another tool for consumers to complete sales.  What is the cost of not completing a sale because either party lacks the knowledge necessary?

There is no time for inexperience, empty promises of false expectations!

Remember:  HIRE WISELY!  We are not all the same!

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