Real Estate for Sale in Americus, Ga. and Ellaville, Ga.

Who pays closing costs? Can I get out of a contract?

Q: Who pays the closing costs?

A: In the 2011 Purchase and Sale Agreement used by Georgia REALTORS the various fees and charges called "closing costs" are paid by the buyer. These costs are identified in paragraph 5 of the agreement (usually called the "contract"). They include a host of fees and charges paid to the closing attorney and the buyer's lender.

   However, the buyer may ask the seller to contribute money for closing costs. In many cases, an amount for closing costs has been estimated by the buyer's agent, and the buyer asks the seller to contribute the estimated amount. The seller may agree to contribute the entire estimated amount, part of it, or none of it. Why would a seller agree to contribute toward closing costs? Answer: That often is the only way the buyer will be able to purchase the property; therefore, if the seller wants to sell the property to that particular buyer, the seller must cover the closing costs. That amount will be in addition to the seller's other costs of closing.

   Buyer requests for seller contributions to closing costs are common in today's real estate transactions. Sellers should discuss with their agents how they will respond to such requests, and be prepared for them. Bear in mind that contributing toward the buyer's closing costs may make the difference between selling your property or not selling it. If a seller agrees to contribute a certain amount for closing costs, and not all of it is needed, the unspent amount remains with the seller. In practice, buyers usually spend the entire amount.

Q: What if I change my mind about buying the property after entering into a contract?

A: In the Purchase and Sale Agreement, paragraph 11, the buyer is given a choice of buying the property with a "due diligence period" or buying it "as is." A due diligence period is a number of days, for example, 10, in which the buyer may proceed with his or her loan application and inspect the property. During the due diligence period the buyer has the option of terminating the contract for any reason. To exercise this option the buyer must give written notice to the seller before the end of the due diligence period. If the buyer does not opt out of the agreement by the deadline, then the buyer is obligated to take the property "as is."

   As the buyer you may choose the option to terminate the agreement within the due diligence period, but after that you are on the hook to buy the property.

Posted - 03/01/2011

Be the first to comment on this entry.

Leave a Comment
Name
Email