Sometimes a post in which I pull data to answer a question becomes a bit more than intended. This is such a post.
- Do sellers pay closing costs? – Are we at a sustainable volume of closed transactions? – FHA is helping foreclosed buyers.
Do the sellers pay closing costs? Is one of the more common questions I get, whether I’m representing buyers or sellers.
A quick look at 2013 â€¦ so far, 1991 homes have sold in Charlottesville, Albemarle, Fluvanna, Greene, Louisa, Nelson. Of those, 518 have something entered into the “seller concessions” field in the Charlottesville MLS, so presumably, about 26% of transactions this year have had some sort of seller concessions.
Last year those numbers were 1,864, 556 and 29%, respectively.**
But really .. what do “seller concessions” mean?
- The seller “paid” the buyers’ closing costs. (not really)
- The buyer is financing the closing costs over the life of the loan.
in other words:
- The seller is accepting a lower net offer
- The buyer is paying a higher net offer.
For example – if a seller is asking $450k and the buyer offers $440k with the seller “paying” $10k towards the buyers’ closing costs, the seller is looking at a net offer of $430k. The seller doesn’t care how that’s structured; they’re looking at a net offer of $430k.
** Just because I’m naturally curious, I looked at the number of closed transactions in the Charlottesville MSA in the January – August timeframe in 2007 â€¦ 2,336. And 2006 â€¦ 2,824. So, from a pure volume perspective, our market is down 30% from the peak. As noted in 2012 – I’ll Know Housing Recovery in Charlottesville When I’ve Seen It
Transactions â€“ volume of transactions â€“ what is normal volume of sales transactions in the Charlottesville MSA? I don’t know; homeownership rates are declining. Last year, 1755 single family homes sold in the Charlottesville MSA (including Louisa). In 2002, 2479 single family homes sold. I’d put the â€œsustainableâ€ rate of single family home sales somewhere in between those two numbers.
We might be getting close to a sustainable recovery.
One sign of the recovery that I called years ago? Those who were foreclosed on are now eligible for new loans – a year after foreclosure.