Seller Paid Closing Costs

Seller paid closing costs or seller paid loan costs as often termed, are simply that; closing costs that the seller pays. Although the seller has their own closing costs, the largest of those paying a real estate fee, the seller may often be willing to pay in full, or partially contribute to paying the buyers fees as well.


Closing costs fees range, maximum limits are generally 3% on conventional loans and up to 6% of FHA loans. Most FHA buyers I work with generally ask for 3.5-4.5% of the sales price for their closing costs and that generally covers everything. With that FHA up front mortgage insurance premieums are included in the loan amount as they can not be paid by the seller.


This is probably one of the most fielded questions I receive from sellers irronically, not buyers. It does take a little explaining, but in most cases the seller does agree some instances may require contribution. Given the target market of your buyer, many buyers may need the costs paid by the seller. If you have a first time buyer scrambling to come up with their downpayment to equal the minimum down of 3.5%, any extra costs associated potentially could make it so they do not have their downpayment. Any buyer can ask for costs no matter if you are trying to come up with your 3.5% down payment, 5%, 10% or even if you are tyring to get to 20% down in order to avoid mortgage insurance.

When a buyer makes an offer on a home, the Realtor will do a net sheet so that the seller knows what their final check at closing will be, or in today’s market sometime how much money they will need to bring to closing. This is a general estimate based on title fees, real estate fees, state and county fees, and pending all payoffs the seller has for any mortgages, tax leins or judgements. If the seller is going to pay for the buyers closing costs this will be looked at on the net sheet and accounted for. If the seller is presented with two offers at the same time, a buyer may want to go above list price of the home if they are going to include closing costs. An example below depicts two offers and although the offer price of Option B is lower, the net price when closing costs are included still is higher and the seller would potentially lean toward that offer.

Option A
Sales Price $150,000
Buyer’s Closing Costs Paid $5,000
Net to Seller $145,000

Option B
Sales Price $148,000
Buyer’s Closing Costs Paid $0
Net to Seller $148,000


Buyers almost assume ANY seller will pay all their fees when in fact some banks will limit the closing costs paid to 3-3.5% of the sales price. I have not had any issues with a bank not willing to pay at least some costs.

Remember, Ultimaltely YOU Are Paying The Costs!

They are called seller paid loan costs, however they are essentially rolled into your mortgage or financed over the term of the loan. I tell my buyers when negotiating that it is nice to have the seller pay the loan costs, but that is money they are paying when it comes time to sell a home.

Remember, if you purchased a home for $200,000 and the seller paid $7,000 in seller paid loan costs, they probably woud have taken a similar offer at $193,000 with NO loan costs being paid by the seller. When you go to resell, those “seller paid loan costs” magically reappear and hurt your bottom line, not to mention the extra interest you paid over the course of time you lived in the home. For example, with a 6% interest rate, if you lived in your home for 5 years and financed $7,000 of loan costs, your payments would be around $35 more per month X 60 months. That would total $2,100! Makes you think if there is a way to come up paying your own closing cost, TRY.

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Shakopee Short Sale Help


One needs a thorough understanding of complex issues in today’s Shakopee real estatemarekt and the knowledge of foreclosure avoidance options available to homeowners. Being a CDPE has provided me and my clients a solutions for homeowners facing market hardships primarily short sales.

Homeowners regularly proceed without guidance of any kind through the often financially and emotionally devastating prospect of foreclosure. Setting up an appointment with a well-informed, licensed Shakopee real estate agent is the best course of action for a homeowner in distress.

There are thousands of licensed Realtors in the state of Minnesota and many Shakopee Realtors, but few decided to focus their efforts in helping those in need of assistance to avoid foreclosure. Through comprehensive training and experience, CDPEs have the tools to help homeowners find the best solutions for their unique situations and to avoid foreclosure through the efficient execution of a short sale.

Living through financial difficulties poses a challenge for any family, so why make the process of finding a qualified real estate professional difficult too? Select an agent with the CDPE Designation or Short Sale Foreclosure Specialist to ensure you have a trained professional to address your specific needs.

I have also teamed with an attorney to help answer any questions one may have tht goes beyond my real estate expertise.

Bank Owned Homes (Shadow Inventory)

It looks like we will be having quite a few more foreclosures coming on the market over the next few years in the Shakopee real estate market. What banks and MN realtors are calling “shadow inventory” of bank owned properties are those homes that are in the midst of foreclosure and are at some point of the foreclosure process. With the amount of current homeowners currently late on payments and in default it will take nearly three years to clear at the current sales rate, according to a report from the credit rating agency Standard & Poor’s.

It has been said more and more lenders are trying to mitigate the amount of foreclosed properties by taking on more short sale scenarios and loan modification, however i have not seen that process get much better and from what I hear 2011 will be the biggest year of foreclosures to date. At the end of March it sounds as though there will be an influx of Fannie Mae owned properties coming on the market that will be eligible for the “Home Path” financing in which buyer can purchase with a lower downpayment, 3% vs the 3.5% FHA minimum downpayment and these homes will also require no appraisal saving buyers an additional $350-500.

As for the total amount of homes in the “shadow inventory”, an article from housing wire states that Amherst Securities places the total at 7m. The Royal Bank of Scotland found 2.7m, and First American CoreLogic counted 1.7m. Those are some HUGE numbers nationwide! The Shakopee real estate market along with other homes for sale in Minnesot are a sure to see more inventory coming to the market.

Do I Need a Shakopee Realtor to Buy a Home?

Simple answer NO.

Surprised a Realtor told you that you do NOT need their services? I know this may seem odd and a bit confusing a real estate agent in Shakopee said you may not need a Shakopee realtor, but you as a buyer do have a choice to use someone or not.

Obviously I as a Shakopee realtor I do find it advantagous to use a real estate agent, but I do so for the following reasons:

1) Commission is Paid by the Seller. Typically the majority of the real estate commission is paid by the seller. In the state of Minnesota often times the total commission is split between both Realtors. Typically 55% of the total real estate commission going to the Realtor who has the home listed, and then 45% of the total real estate commission going to the Realtor who represents the buyer. Often the only real estate commission that is paid by the buyer is a broker administrative commission. That commission is part of the closing costs and generally around $375. It is a fee you can have the seller pay as part of seller paid loan costs.

2) Market Knowledge. I beleive if you select a good real estate agent they will have the knowledge of the area. I see this often with buyers and sellers. You can tell when a Realtor who is not familiar with the Shakopee real estate market. They come in  price homes incridibly high and those homes will sit on the market. Make sure when you have a free market analysis the agent does not just give you a price you want to hear, but backs that price up with homes that have sold recently,within the last 4 months. That also goes if you think they are pricing the home low, make them show you the comparable sales. A Shakopee realtor should be able to give you a value within 24 hours and may not even need to go to your home to give you a ballpark idea on price if they know the area well enough.

3) Contracts, contracts, contracts. No, a real estate contract is not the hardest document to disect, but having a Realtor who knows how to structure the contract to present your offer in the best light can be very helpful. Knowing the contingencies, how they are structured, timelines, how to negotie them can be very valuable.

4) Negotiations. I think many Realtors try to play the we offer A, you counter with C, and then we will meet in the middle at B. All negotiations do not have to go this way, otherwise you could easier do it yourself.  One reason in my opinion to have a Realtor is to take out the emotion of  buying a Shakopee home. Sure buying a house is one of the biggest decisin you can make and emtions run high, especially in multiple offers. We are seeing many mutltiple offer senarios with bank owned homes in Shakopee and knowing what banks are looking for and how to structure your offer can be crucial. I just heard of one accepted offer an agent in our office had that was only $200 higher than the offer that was accepted. Really $200? That was the difference between getting a home that sold over $125,000 more only a few years ago! Make sure you have a real estate agent in Shakopee who can structure your offer optimally.

5) Prelist Inventory. I can literally find out information on hundreds of homes for sale in Shakopee with networking with agents in my local office. Re/Max Advantage Plus is one of the top listing brokers in the state for bank owned homes.

6) Do You Want Representation? In my opinion this is the biggest reason to hire your own Shakopee Realtor. If you are going from open house to open house or call the agent on the signs, those agent represent the best interests of the seller. That’s right; those agent priming you for data are representing the seller and will use that infomation against you if you are trying to negotiate on the home they are standing in. If they ultimaely decide to represent you too, then you are in a dual agency representation senario in which the realtor almost needs to stay neutral.

Hopefully you found this information helpful and if you want any information on a Shakopee Realtor, I do not require my clients to sign buyer contracts with me until you are either comfortable or we eventually write an offer. I look at the process as I would, and if I were to buy a home I would not sign anything with anyone until i knew how they worked and if I knew they were going to do a great job.

Out with the old, in with the new…but why?

Recently the Shakopee video rental market has changed. Blockbuster near Cub Foods is closing down after YEARS of occupying the corner of the strip mall next to Super America off of Marschall and Vierling Dr. The odd part is there is a new video store opening just down the street on Marschall Rd where the old Snyders used to be accoss from the Wells Fargo building on 4th Ave.

I do ask myself why. In the new age when everything is being pushed toward streaming movies online I wonder what audience they are tyring to cater to, or if they will have some sort of “catch”. Personally if my wife and I want to go rent a movie now, we just hit up a Redbox located at the Holiday station near our home in Shakopee.

I’m not sure what the new store name is, or if they will have any other business attached, but it located near our Re/Max Advantage Plus office in the Voyager Bank building. They have been making many improvements lately so it will be interesting to see what happens in the near future.

I could see eventually see the Shakopee real estate market also changing similarly as many local real estate agencies are condensing and reducing space. Despite rumors I have heard about the Shakopee Coldwell Banker office and the Shakopee Edina Realty office potentially closing they ARE NOT.  The Edina Realty office in Shakopee, which I worked at for 9+ years,  located off of Vierling Dr is only reducing their space from over 8000 sqft to under 4000 sqft. I also had coffee last week with the manager at Coldwell Banker and he stated they have had a great year so far and condensed their square footage to one floor. Neither of these companies would close shop and move, but rather just realign themselves for the changes in our real estate marketplace. There simply are not the number of Shakopee Realtors anymore that there was years ago and I do see that as a good thing! I think the agents in the marketplace now are committed to the business and are more overall prepared to help their clients.

Why Active Shakopee Homes Are Sold

Do you wonder why homes in Shakopee that are sold show up on many real estate agents websites?

There can be many reasons a home in Shakopee can show up this way. A few reasons are homes are sold subject to an inspection, sold subject to another home selling, or the most likely reason in todays Shakopee real estate market, sold subject to third party approval. Shakopee realtors are able to still show these homes as active because technically they could accept another offer, although that offer would be subject to a cancellation of the first offer.

The first two reasons are pretty obvious as to why a home in Shakopee is sold, but the third can be a bit more complicated. Houses in Shakopee sold subject to third party approval are essentially a short sale. They are homes that need bank approval because the owners mortgages total more than the home is worth. Still this really does not answer the question. To answer the question, Shakopee bank owned homes are getting smarter,hold your laughter because we all know that entertains us a little, but they really are. Often times a real estate agent is pressured by the bank to keep the home marketed so the bank feels they truly did receive the highest price for the home.

If you feel a little lucky and think you may have found “The One” Shakopee home out there for you, feel free to submit a back up offer, sometime banks do reject all short sale offers and yours could be net in line.

Wait to buy a home in Shakopee if you want to pay more $

Many buyers searching the MLS  have been sitting and waiting for home prices to hit bottom. The problem with theat theroy is we ultimately will not know what are at the bottom, until we are on our way back up. Minnesota buyers looking to purchase their first home in Shakopee, or possibly their next home want to try guarantee that they are purchasing at the best possible price. I do believe that prices still have some room to fall in the Shakopee real estate market due to the overwhelming foreclosure numbers you see in our current real estate marketplace. I do however, disagree waiting is the best option. In the midst of some of the lowest interest rates we have seen, and may potentially ever see, I feel more buyers should be taking advantage of low interest rates. Most buyers feel that waiting is a good financial decision when it comes to the current real estate market conditions. The buyers in the current Shakopee real estate market should not be so concerned about housing prices, but they should also be concerned about cost. Interest rates and current pricing are the two factors that dictate your overall cost.


I could realistically see the price of Shakopee real estate dropping 10% of the course of the next few years. Note if there was a decrease of 5% per year in 2011 and 2012 from an original sales price of $200,000 at the end of 2010, by year end in 2011 the value would be $190,000 and by 2012 $180,500. Overall the is a decrease in price of almost $20,000. That really makes one think before purchasing. I compare real estate similarly to that of the stock market. No one watches their stocks EVERY SINGLE DAY to see where their value is, but rather when the time comes to sell you may take a closer look. Those purchasing today really do not need to look at values decreseing the next two years, which is just a possibility, but what are their payments going to be and overall cost.

If you were to have purchased that same Shakopee real estate for $200,000 in 2010 with an interest rate of 4.5%, your payments as a first time buyer with 3.5% as a downpayment would be an estimated $1,283. This does not include taxes or insurance. Now multiply that payment by 24 months and the cost would total $26,472 in principal and interest payments over that two year time frame.

If values held tight and that same homes was worth $200,000 tqo years later and Iif interest rates for a 30 yr fixed rate mortgagehad increased at the same time to 6%, your monthly payments would jump to $1,283 and at 6.5% they would increased even higher and ballooned to $1,345.

Over the course of 24 months the total cost in payments alone at a 6% over a 4.5% interest rate would be $180 per month to total $4,320, and at a 6.5% rate the monthly cost would be $242 more per month totaling $5,808

Now fast forward two years and theorize the value would potentially fall 10% to $180,500. If interest rates for a 30 yr fixed rate mortgage increased at the same time to 6%, your monthly payments would jump only to $1,158 and at 6.5% they would increase to $1,214.

Over the course of 24 months the total cost in payments alone at a 6% over a 4.5% interest rate would be $55 per month to total $1,320 and at a 6.5% rate the monthly cost would be $111 more per month totaling $2,664.


The power of compounding interest. The lower your interest rate, the more principal you will pay on your loan early. The numbers above show a brief example of a cost estimate that may still leave you wondering why the numbers don’t quite even out. The reason being is I took a snipet only over two year year period to show the savings over that two year time frame.

To analyze the big picture and total cost savings as most people will stay in their home over a longer period of time, look at the overall 30 yr total interest and principal payment costs:

$200,0000 @ 4.5% total cost $359,046

$200,000 @ 6% total cost $423,568

$200,000 @ 6.5% total cost $446,162

$180,500 @ 6% total cost $382,270

$180,500 @ 6.5% total cost $402,661

Even if prices fall another 10% , the cost of a owning a Shakopee home will increase if interest rates goup more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be in the future.

Southbridge 4 Level Home

Great four level home in desirable Hamlet of Southbridge. Spacious and open floor plan with soaring vaults. Extra room because of “bump-outs” added during construction. Close to shopping, schools and parks.

Wooded Privacy | Shakopee Rambler

Don’t miss this unique rambler set on a private retreat. 10′ ceilings, double sided floor to ceiling boulder fireplace, w/o lower level, vaulted foyer, kitchen tile floor cut from french castle stone, hand painted backsplash and much, much more.

Shakopee Townhome w/ Basement

Unfinished lower level w/3rd bath rough in. End unit townhome.Like new carpet,new laminate floors in kitchen & dining room. New ceramic bath, quality cabinets w/dovetailed drawers.Huge bedrooms,lots of storage & potential 3rd Bed or family room in lower level.Seller will pay 1 yearr assn dues. Quality built and local builder, Link Construction.