Help with Contract - Please

[wasnt]

This is my first home and I am confused about my contract. I put in a bid on a home and it was accepted (YAY!). It's a HUD home that was up for $216,000. We bid $215,000 with seller paying closing costs ($6000).

So my question is this. My contract says I am financing $215,000 and the SELLER is paying $6000 (closing costs), $6450 (Selling Realtor commission), & $6450 (Buying Realtor commission). The contract says that "The net amount due Seller is $196,100."

If the SELLER is paying the $18,900 difference, why am I financing $215,000 instead of $196,100 (minus the $7,525 down payment, of course)?

Someone help... I don't get it.

[Evan Bedard]

Welcome and thanks for joining the forum.

What is the total purchase price of the property?

[doneinca]

Sale price is 215,000 - 6000 closing - 6450 seller comm - 6450 buyer comm =196,100 net to seller.

You are paying $215k. The seller is just taking thier expenses out the sale instead of paying out of pocket up front.

[Evan Bedard]

That is exactly what has happened, these fees will be paid out of the sale's price and not out of the seller's pocket prior to financing..

[Cat Damiano]

This is my first home and I am confused about my contract. I put in a bid on a home and it was accepted (YAY!). It's a HUD home that was up for $216,000. We bid $215,000 with seller paying closing costs ($6000).

So my question is this. My contract says I am financing $215,000 and the SELLER is paying $6000 (closing costs), $6450 (Selling Realtor commission), & $6450 (Buying Realtor commission). The contract says that "The net amount due Seller is $196,100."

If the SELLER is paying the $18,900 difference, why am I financing $215,000 instead of $196,100 (minus the $7,525 down payment, of course)?

Someone help... I don't get it.

Have you tried asking your agent to go over the contract with you? They should have done this with you when you were putting in your bid, since you would be unable to put in an offer on a HUD Home by yourself. You must use a Selling Broker who is licensed to sell HUD Homes to represent you (or a Selling Agent who works under that Broker), so they should understand the contract process.

It works the same way as when you purchase a non reo home, the amount that is the purchase price of the home includes the Realtor commission in the listed price.

HUD will pay up to 3 percent; of the purchase price in closing costs that are considered to be reasonable and customary in the jurisdiction where the property is located. Closing costs should be entered on Line 5 of the Sales Contract. HUD will pay the lesser of the amount requested on either Line 5, or the actual closing costs. Any funds remaining after the allowable closing costs have been paid will not be credited to the buyer at closing. Review the Forfeiture and Extension Policy addendum to the sales contract package for the list of closing costs that will be paid by HUD.

HUD also allows, and will pay, up to 3 percent; of the purchase price for the selling agent’s commission, which should be entered on Line 6a of the Sales Contract. Line 6b denotes the Local Listing Broker’s commission, which is 3 percent of the purchase price. Selling and Listing Brokers are eligible to receive a $1,250 commission on select HUD Homes; these properties are identified on www.HUDHomestore.com and in the MLS listing. The submitted bid is the final determination of the selling agent commission amount, and may not be modified after bid acceptance under any circumstances.


Note that higher closing costs and commissions will reduce the net to HUD, and may affect the competitive bidding ratio. Only the selling agent may choose to reduce his/her commission; the LLB commission may not be reduced.


HUD does not pay any closing costs or commissions on Good Neighbor Next Door (GNND) properties. Please note that even though GNND participants are required to utilize a real estate agent to submit their bids, HUD will not pay the selling agent commission; however, if FHA financing is used, the purchaser may add closing costs and commissions to their loan.