November 17: "If you don't use it, you lose it"

Today's Tidbit is called "If you don't use it, you lose it"

With the market how it is these days, sellers are offering closing cost credits to help buyers buy the interest rates down or to incentivize them to purchase without lowering the sales price by too much.

Before you write an offer and get into a seller credit scenario, be sure to first:

1. ask the lender what the maximum credit is for the buyer to get

Once credit is set in the contract,

make sure the entire monetary amount is utilized. If there is any left over credit, (balance of credit after amount needed for rate buydown) make sure you get an addendum in the contract to: either reduce the purchase price by that amount of credit (if the CD has not come out yet) or use it to buy home warranty and/or if all other outlets are exhausted, ask the commission to be increased by that amount so it is not wasted.

Read below actual verbiage from the CAR contract addressing credits for closing costs:

5E Limits on Credits to Buyer:

(1) Any credit to Buyer as specified in paragraph 3G(1) or otherwise Agreed, from any source for closing or other costs that is agreed by the Parties (“Contractual Credit”) shall be disclosed to Buyer’s lender, if any, and made at Close of Escrow. (2)   If the total credit allowed by Buyer’s lender (“ Lender Allowable Credit” ) is less than the Contractual Credit, then (i) the Contractual Credit from Seller shall be reduced to the Lender Allowable Credit, and (ii) in the absence of a separate written agreement between the Parties, there shall be no automatic adjustment to the purchase price to make up for the difference between the Contractual Credit and the Lender allowable credit.