I'm confused as to what you mean by the seller's closing cost? The closing cost for you to buy the property is your cost, not theirs. Many buyers will ask for the sellers to cover some of the closing cost (put in offer).

If you are worried about the house appraising how will you include the additional costs in your mortgage?

You can offer and make any agreement but if you are obtaining a mortgage, the lender will be involved.

hollynia,

You think sellers do not have significant closing costs?

Hollynia costs here typically include sellers title insurance and transfer taxes. I was also referring to re commission (all or part)

Good point cmarlin but I don't know that the non-comission costs would be material enough or even calculated as part of the appraisal consideration. I may be wrong but I think the appraisal req are intended to protect the banks collateral in the case of a default

Perhaps this is just circumstantial but I am thinking that when a seller holding out for a high price they are probably counting on an all cash buyer coming along. If they sell their property for less money than they are hoping for they would want a good reason why. The lower risk of a appraisal/loan contingency tripping them up is one thing and I suppose their state capital gains taxes would be lower too.

On my side of the equation i might be able to get a fair price for the property, have lower taxes then if I over-paid, lower monthly payments and of course less interest expense over the time I would own the property. That said I could also have higher out of pocket expenses and the opportunity cost of capital.
Of course I could keep shopping and/or wait for them to come to the same conclusion on valuation. Or I could just offer them what I think its worth and see what happens but I think they'd likely be insulted (at this juncture).

No, I've never known seller to have significant closing cost when selling a property. Title insurance and tax transfers is buyer's cost, not sellers. Real estate commission is the only cost for sellers that I can think of but I don't consider that closing cost but if that was what you were referring to, then that would explain it.

This post was edited by hollynla on Thu, Sep 25, 14 at 7:33

double post

This post was edited by hollynla on Thu, Sep 25, 14 at 7:34

"No, I've never known seller to have significant closing cost when selling a property. Title insurance and tax transfers is buyer's cost, not sellers."

This is simply not the case in all jurisdictions. I am in Montgomery County, Maryland. On a $500K residential sale the County Transfer Tax plus State Transfer Tax plus Recordation Tax is about $10, 950. By default, the local standard Closing practice is to split these costs equally between the Buyer and the Seller.

The seller has numerous other Closing costs, to include Realtor Commission, which is an itemized cost addressed at Closing.

As a retired Navy Submariner, I have bought and sold in many states... closing costs vary dramatically locale to locale.

My favorite state for ease, is California's escrow process.

Here is a link that might be useful: Montgomery County MD Typical Closing Costs

This post was edited by saltidawg on Thu, Sep 25, 14 at 9:36

Back to the OP. I don't think it will fly. The bank will only loan X% of their appraised value of the property. Period. I am pretty sure that underwriting rules would prohibit a "kickback" to the seller. Now if you paid out of pocket outside of escrow, then that's another subject. But you won't be able to involve a conventional lending institution in your scheme.

IF you want to roll in the sellers closing costs, (never heard of that but lets just go with it), the house would have to appraise for the higher amount. You can't remove the mortgage contingency if you are getting a mortgage. No matter how you word it, if you are getting a mortgage, IT IS contingent on getting that mortgage, unless you could buy it for cash. How over priced do you think the house is?

Don't have an appraisal to go on so hard to say. Looks around 15-20%.

Perhaps I could ask to do an appraisal on my dime to determine if an offer is warrented??

. The appraisal is on your dime. The mortgage is a contingency unless you are in a position to make a cash offer. Make an offer with an appraisal contingency. If the house doesn't appraise, you have an out if the seller doesn't reduce to the appraisal price.