Lease Buy out - Seller Concession question - Answer
August 5, 2009
Today at a realtor sales meeting we had a question regarding seller concessions.
Question:
A seller is willing to pay to buy the buyer out of their rental lease commitment so the buyer could close on the purchase of their home. The realtors told me that underwriters at other lenders had turned this down.
The concessions were within what is allowable, either 3% or 6% depending on the loan product.
The concession was detailed on the contract.
The pay off would be line itemed on the HUD payable to the apartment complex or landlord.
Is there any reason why this could not be considered a reasonable sales concession?
Answer:
This is a seller concession that results in a dollar for dollar reduction of the sales price. It is not a financing concession and therefore does not fall in the category of the 3%/6% financing concessions that are allowed.
Options are to increase seller paid closing costs to recoup the amount of pocket expenses to the buyer of the property.
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