Should I Ask the Seller to Pay My Closing Costs or Offer a Lower Price?

Short answer: If cash is your bigger problem, seller-paid closing costs may help you more. If keeping the purchase price down matters more, a lower price may be the better ask.

Those two requests are not the same thing.

A buyer will sometimes tell me:

“I just want the best deal.”

Fair enough.

But first we need to decide what “best deal” actually means for you.

Do you need to bring less money to closing?

Do you care more about the monthly payment?

Are you trying to protect your savings?

Or are you mainly trying to buy the home for the lowest price possible?

Once we know that, the offer gets a whole lot easier to think through.

What Are Seller-Paid Closing Costs?

When you buy a home, the down payment isn’t the only money you may need.

There can also be:

• Lender fees
• Appraisal costs
• Title and settlement charges
• Homeowners insurance
• Prepaid taxes and insurance
• Escrow deposits
• Other costs tied to the loan and closing

A seller credit is money the seller agrees to contribute toward eligible buyer closing costs.

The Consumer Financial Protection Bureau explains that buyers can negotiate for seller credits, although sellers may want a higher purchase price in return. Consumer Financial Protection Bureau

So when somebody says:

“The seller is paying my closing costs,”

those costs aren’t magically disappearing.

We’re negotiating who brings the money and how the deal is structured.

Why Would I Ask for Closing Costs Instead of a Lower Price?

Because cash in your pocket today can matter more than a slightly lower purchase price.

Let’s use an easy example.

Suppose a Smithfield home is listed at $400,000.

You have two possible offers in mind:

Those offers are not financially identical, and your lender needs to run the actual numbers.

But here’s the practical difference:

Option A gets you a lower price.

Option B may let you keep more of your own cash instead of bringing it to closing.

For some buyers, that $10,000 in available cash is a much bigger deal than the payment difference created by borrowing $10,000 less.

Keeping Some Cash After Closing Matters

This is something first-time buyers especially can overlook.

You don’t want to buy a house and have exactly $47 left in the bank.

Houses cost money after closing too.

Moving.

Furniture.

Curtains.

A lawn mower.

A refrigerator that decides it has had enough three weeks after you move in.

Things happen.

So if asking the seller for closing-cost help lets you keep a healthy emergency fund, I may like that strategy better than squeezing every possible dollar out of the sales price.

That depends on your situation.

Does a Lower Price Save Me More Over Time?

Potentially.

A lower price can mean:

• A smaller loan
• Less principal to repay
• Possibly a slightly lower monthly payment
• Less interest paid over the life of the loan

But this is where people sometimes expect too much.

If you lower the price of a $400,000 home by $5,000, your monthly payment probably isn’t dropping by $5,000 divided by 12.

That $5,000 gets spread across a long mortgage.

So I’d ask your lender to show you the actual difference.

Don’t guess.

You may find that keeping $5,000 or $10,000 in your bank account today matters much more to you than the relatively small monthly payment difference.

Or you may decide the opposite.

Can I Ask for Both a Lower Price and Closing Costs?

You can.

Whether that’s a smart offer is another question.

Imagine the house is listed for $400,000 and you offer:

$380,000 plus $12,000 in seller-paid closing costs.

Now look at that from the seller’s side.

You aren’t simply asking them to reduce the price by $20,000.

You’re also asking them to give you another $12,000 at closing.

That’s a much bigger concession.

Maybe the property has been sitting for six months and the seller is ready to move on.

Maybe it works.

But on a new listing with good activity, that offer may not be very competitive.

This is why I don’t write offers in a vacuum.

How Does the Seller Look at My Closing-Cost Request?

Usually through their net proceeds.

The seller cares about what they walk away with.

A $410,000 offer with a $10,000 seller credit might look very similar to them financially as a $400,000 offer without one — before considering all the other terms and costs.

That doesn’t mean those offers are identical.

Appraisal risk can be different.

Financing can be different.

Other terms can be different.

But it helps explain why a seller may be willing to give a credit if the overall deal still works for them.

It can help to understand the same closing-cost question from the seller’s side too.

Can We Just Raise the Price to Cover My Closing Costs?

Sometimes.

But be careful.

The CFPB specifically warns that a seller may agree to a higher purchase price in exchange for paying some closing costs, but the home still has to support that price. If it does not appraise, the higher price can create a financing problem. Consumer Financial Protection Bureau

For example:

Maybe the seller would accept $395,000 with no credit.

Instead, we offer $405,000 with a $10,000 credit.

That could help with your cash-to-close.

But if the appraisal comes in at $395,000, now we have another problem to solve.

So we can’t just add money to the purchase price and pretend it doesn’t matter.

How Much Seller Credit Can I Ask For?

That depends on the loan.

Different loan programs have different rules about what seller credits are allowed and how much can be used.

That’s why this is one of those questions where I want your lender involved before we write the offer.

I don’t want us negotiating $12,000 in assistance and finding out later your loan only allows you to use part of it.

Your lender should tell us:

• What your loan allows
• How much credit you can actually use
• What costs are eligible
• How that changes your cash to close

The CFPB’s Loan Estimate guidance also shows that seller credits reduce the buyer’s estimated cash needed at closing. Consumer Financial Protection Bureau

What If the House Needs Repairs Too?

Now we have another choice.

Maybe the inspection finds a repair that will cost around $5,000.

That becomes part of the same decision about what repairs are worth asking the seller to handle.

We could ask the seller to repair it.

We might negotiate the price.

Or, depending on the loan and problem, a seller credit may be useful instead.

The CFPB notes that seller credits are sometimes used in place of completing repairs before closing, although the buyer still has to deal with that repair afterward. Consumer Financial Protection Bureau

That can work well.

But not every problem can simply be pushed past closing.

Some property or financing issues may need to be fixed first.

Which Is Better if I Plan to Stay in the Home a Long Time?

That’s where the lower price becomes more interesting.

If you have plenty of cash available and plan to own the home for many years, reducing the amount you borrow may matter more to you.

But even then, I’d want your lender to show you the numbers.

Ask:

“What does my payment look like at this price?”

Then:

“What does it look like if we pay $5,000 more and get $5,000 toward closing?”

Put the two options side by side.

Then you’re making a real decision instead of guessing.

What If I’m Short on Cash?

Then seller-paid closing costs can be extremely valuable.

Maybe you can comfortably afford the mortgage.

You have the income.

You’ve been approved.

But between the down payment, closing costs and moving expenses, the cash required is stretching you.

In that situation, I may care a lot more about preserving your savings than negotiating another few thousand dollars off the price.

Buying a home shouldn’t require you to empty every account you have.

Does Asking for Closing Costs Make My Offer Weaker?

It can.

Especially if another buyer is offering similar money without asking the seller for assistance.

But it depends on the market and the property.

If the home has been sitting, the seller may be very open to it.

If it was listed yesterday and several buyers are competing for it, we may need to think differently.

Just like we talked about when deciding how much below asking price to offer, the strength of your offer depends on what’s happening with that particular house.

There isn’t one strategy for every listing.

What I’d Tell a Buyer Sitting Across the Table From Me

Don’t ask for closing costs just because somebody told you buyers are supposed to.

And don’t skip asking for them just because you’re afraid the seller will say no.

Let’s figure out what helps you most.

Do you have plenty of cash but want the lowest possible price?

Maybe we push harder on price.

Would keeping another $8,000 in savings make you much more comfortable after closing?

Maybe the seller credit matters more.

Do you need both?

Then we need to decide how aggressive we can realistically be without making the offer unattractive.

There’s no prize for negotiating the lowest purchase price if you can’t comfortably get to closing.

The goal is to put together a deal that works.

Thinking About Buying in Hampton Roads?

If you’re thinking about buying in Smithfield, Isle of Wight, Carrollton, Suffolk or elsewhere in Hampton Roads and you’re not currently represented by a real estate agent, I’m happy to help you understand how price, seller credits and cash-to-close fit together before you make an offer.

Call or text me at 757-880-7061 or email me at [email protected].

Ask me anything. I’m happy to explain the options in plain English.

Jason Goodin
Principal Broker
Virginia 1st Realty Group

Frequently Asked Questions

Is it better to ask for closing costs or offer less for the house?

It depends on your finances. A lower price reduces what you pay for the property, while seller-paid closing costs can reduce the amount of cash you need at closing.

Can the seller pay all of my closing costs?

Possibly, but loan programs have limits and rules governing seller contributions. Your lender should tell you exactly what your financing allows.

Can I offer more for the house and ask the seller to pay closing costs?

Sometimes. But the home still has to appraise for the agreed price if financing depends on the appraisal.

Do seller credits lower my monthly mortgage payment?

Not usually in the same way a lower purchase price does. Seller credits primarily reduce eligible upfront closing costs. Ask your lender to compare both scenarios for you.

Can seller credits be used for repairs?

Sometimes seller credits can be negotiated instead of a repair, depending on the issue, contract and financing. Some problems may still have to be repaired before closing.