What’s A “Seller Contribution” In Real Estate?
A sale agreement typically includes both a purchase price for the property as well as various terms and conditions.
It sometimes happens that a buyer will make an offer subject to certain terms — I’ll buy your house but I want to keep the washer and dryer or whatever.
One possible condition concerns “seller contributions.” For example, I’ll buy your house if you’ll pay the first $5,000 of my closing costs. Why would a seller agree to such a demand? To sell the house in a tight market.
Lenders will generally accept seller contributions as part of a transaction providing they are written into the sale agreement, fully disclosed and only represent a limited fraction of the sale price. Different loan programs have different contribution caps — some limited to 3 percent of the sale, some limited to 6 percent, etc. Lenders and brokers can provide specific advice.
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