seller contribution quest?ion

pi71 · Joined: 08 Jun 2005 Posts: 6

ive got a question if you dont mind. i am closing on my house on monday and this is an fha loan. the buyer was having trouble with money and i did a seller contribution of 3%. I put this amount in the blank under Residential service contracts. now the seller comes to me and tells me that she has qualified for a ameridream grant. Was this a result of my 3% ? I guess what i am asking .....Is a grant and a seller contrbution 2 different things? or can i get stuck with both? thanks a mill.
rusty carr

chow · Posted: Wed Jun 08, 2005 11:20 pm Post subject:

Your're the seller or the buyer? I assume you are the seller because you're asking about additional amounts.

The closing agent will follow the purchase agreement. If you have 3% on your seller concessions, then you will also have to pay any FHA non allowable costs-or seller required costs if you indicated you would-those could go over the 3%. There are at least two places in most contracts for this verbiage.

Since you have a purchase agreement, this is a contract that your Realtor should be able to explain to you-what fee's are included, and what your costs are.

In the interest of education, I will tell you that FHA will allow 6% seller concessions, with Ameridream, and then all of the FHA seller costs for that loan program, on top of any Prepaids the seller agreed to, over the 6%.

If you have a maximum amount of money that you can give as a seller, for assistance with closing costs, Do not let Ameridream scare you. Your contract is specific, and you are allowed to view the HUD1 Settlement statement before you close. ( I know your Realtor will be camped on the fax machine for it-so ask for it!)

We make fun of Realtors around these boards, but most of them are pretty good people. Just pick up the phone and ask about your concerns. I close loans as a Settlement Agent for major Title Companies, and these concerns come up. As long as the bottom line is where you need it-Don't sweat it out. There are no stpid questions when it comes to Money, or a RE transaction.

Call your agent, if you don't feel comfortable, Call their Boss! It' a contract, they have to follow it!

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Listen to Chow, she knows her stuff ;)

That was kind of confusing, but I think Chow covered it. Keep in mind that you can't get 'stuck' with them. If you have to pay something, it needs to be part of the contract. So make sure you ask questions so you understand exactly what it is that you are paying for.

pi71 · Joined: 08 Jun 2005 Posts: 6

yes i am the seller. and i sold my house to my neighbor and did not use a realtor just the buyers lender and my title company.

pi71 · Joined: 08 Jun 2005 Posts: 6

i dont mean to sound stupid but i still dont understand what my 3%is for. here is exactly what it says on the contract where i put 3%

H. RESIDENTIAL SERVICE CONTRACT. buyer may purchase a residential service contract from a residential service company licensed by TREC. If Buyer purchases a residential service contract, Seller shall reimburse Buyer at closing for the cost of the residential service contract in an amount not exceeding $ 3%. Buyer should review any residential service contract for the scope of coverage, exclusions and limitations. The purchase of a residential service contract is optional. Similar coverage may be purchased from various companies authorized to do business in Texas.

Now ,, this is what the title company is telling me is seller contribution, are they right? or is this a mistake.

I need simple answers please..

pi71 · Joined: 08 Jun 2005 Posts: 6

to ask another question or to put it another way. am i going to pay 3 % for my seller contribution and then pay another 3% contribution to the ameridream charity? THANKS

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

If that is how you right it in your contract, and if you agree to the down payment assistance, then yes.

pi71 · Joined: 08 Jun 2005 Posts: 6

H. RESIDENTIAL SERVICE CONTRACT. buyer may purchase a residential service contract from a residential service company licensed by TREC. If Buyer purchases a residential service contract, Seller shall reimburse Buyer at closing for the cost of the residential service contract in an amount not exceeding $ 3%. Buyer should review any residential service contract for the scope of coverage, exclusions and limitations. The purchase of a residential service contract is optional. Similar coverage may be purchased from various companies authorized to do business in Texas.

this is all ive agreed to so far, so what is this in laymans terms? thanks.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

You have to agree to what is going on. The 3% listed there would be seller concession, which would be towards the buyers closing costs and prepaids (usually.) In order for them to utilize Ameridream, they will have to actually have you sign a paper that says you are aware that they are doing a down payment assistance and that that would be in addition to the 3% of the contract. This obviously cuts into your profits. Not only would you be looking at whatever the amount is they are requesting through the down payment assistance, you would also be liable for the fee for using such a program.

I have not personally used Ameridream, so I'm making a small assumption that it works the same as the other DAP's that I have used. I hope that answers your questions, if not feel free to send me a PM with your contact info and I'll give you a call with some information in front of me tomorrow about it.

chow · Posted: Thu Jun 09, 2005 11:15 am Post subject:

"If Buyer purchases a residential service contract, Seller shall reimburse Buyer at closing for the cost of the residential service contract in an amount not exceeding $ 3%"

Okay, since you have this verbiage-I could assume that you are limited to 3%. But you do have some help here-The title company can look at your contract-they have to follow it for the closing. Call them, and get your answers. Fax them your contract, the papers the lenders sent you, and make sure your costs are what you agreed to. Since you have not ammended you purchase agreement, I'm assuming the 3% you said you would do for them, is going to be part of the ameridream program. You will have seller's closing costs for the title agency, but the title company/closing agent can give you these costs when you call them. You're their customer too, so don't worry about asking them to explain it to you before the closing. To give an additional 3%, you would have to ammend your sales agreement.