Why Smart Buyers Are Offering Full Price and Walking Away With 20000 Cash at Closing

The Homebuying Strategy Going Viral Right Now and Why It Actually Makes Sense

Most buyers approach price negotiation the same way. Find out what the home is worth, offer less than the asking price, and hope the seller meets them somewhere in the middle. It is the default approach and it produces a predictable result. A slightly lower purchase price and a slightly lower monthly payment.

But there is a different approach that smart buyers are using right now that produces a result most buyers would find more valuable than a modest price reduction. And most buyers do not even know how to ask for it.

Here Is How the Strategy Actually Works

Imagine a home listed at $450,000. Based on comparable sales you believe you could negotiate the seller down to $430,000. The traditional move is to offer $430,000. Your down payment decreases slightly. Your monthly payment comes down by approximately $100. You feel like you won the negotiation.

Here is the alternative approach. You offer the full $450,000 but you ask the seller to give you $20,000 back at closing in the form of a seller credit.

Your monthly payment is approximately $100 higher than it would have been at $430,000. But at closing you walk away with an extra $20,000 in your pocket. Cash you can use for furniture. Cash you can put toward renovations. Cash you can hold as a financial cushion during the transition and the first months in the new home when unexpected expenses almost always appear.

Why Sellers Say Yes to This

The reason sellers agree to this structure is straightforward. They net the same amount either way. A seller who accepts $430,000 with no credit receives $430,000. A seller who accepts $450,000 with a $20,000 credit also nets $430,000 after the credit is applied at closing. From the seller's perspective the economic outcome is identical.

From the buyer's perspective the outcomes are dramatically different. A $100 higher monthly payment over a thirty-year mortgage costs the buyer approximately $36,000 in additional interest over the full loan term. But that $20,000 cash in hand at closing has immediate and tangible value at exactly the moment it is most needed when the buyer is moving in, making immediate improvements, and absorbing the costs that accompany every home purchase.

For buyers who are cash-tight at closing or who know they will need funds for immediate improvements the seller credit strategy produces a materially better outcome than the traditional price reduction approach.

As Tom Seaman Explains This Is Just One of Seven Seller Credit Strategies

The offer-full-price-plus-credit approach is one of the most immediately impactful seller credit strategies available to buyers in the current market but it is not the only one. There are seven distinct seller credit strategies that buyers can use depending on their situation, the property, the seller's motivation, and what the buyer needs most from the transaction.

Some strategies focus on reducing the monthly payment through rate buydowns. Some focus on covering closing costs entirely. Some involve structuring credits to address inspection findings. Each one is designed to use the negotiating leverage that exists in the current market to produce a specific financial benefit for the buyer.

Get the Free Guide That Breaks Down All Seven

Tom Seaman has put together a free guide that covers all seven seller credit strategies and explains exactly how to ask for each one in a way that sellers and their agents will receive positively. Comment the word home to receive the guide and find out which strategies apply to your specific buying situation right now.

Sources

NAR.realtor MortgageNewsDaily.com Investopedia.com ConsumerFinancialProtectionBureau.gov Forbes.com