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Some home buyers in Portland, Oregon have a hard time coming up with the funds needed to cover their closing costs and down payment.
It’s easy to understand why. On a typical home purchase in Portland, the minimum (3%) down payment for a conventional loan might range from $15,000 to $20,000. Additionally, a home buyer’s closing costs could double that upfront investment.
That’s why Portland home buyers often request concessions from the seller, to help cover their closing costs. This is one of the many home buying strategies in Portland that can help buyers overcome the upfront cost hurdles of a home purchase.
This guide explains how using seller concessions when buying a home in Portland works, and how to decide when it makes sense to request one.
Seller concessions in Portland are financial incentives offered by home sellers to help buyers offset the cost of purchasing a property.
There are different types of concessions. A Portland homeowner who is selling their home might offer anything from repairs to furniture to financial contributions. Any time a seller “concedes” something to a buyer, it’s known as a seller concession.
In the Portland area, buyers often request the following types of concessions:
For the rest of this article, we will focus on the closing cost version of the seller concession. It has the potential to reduce a major obstacle for home buyers in Portland.
As a home buyer, you can request a concession from the seller simply by writing it into your purchase agreement (which later becomes the official contract).
Whether or not it’s wise to do so will depend on current market conditions, and we’ll cover that in a moment. But the procedure itself is straightforward and usually works like this:
In Portland, Oregon, seller concession clauses are somewhat standardized. Real estate buyer agents typically use a boilerplate document for this purpose, filling in the blanks with specific details.
Here’s an example clause that might be used to request a seller concession in Portland:
“Seller Credit: The Seller agrees to provide a concession to the Buyer in the amount of [Dollar Amount or Percentage] to be applied toward the Buyer’s closing costs, including but not limited to loan origination fees, discount points, pre-paid items (such as property taxes and insurance), title insurance, and other customary closing costs.”
The language can be adjusted as needed to reflect the buyer’s specific request.
But again, the seller can either accept such a clause, reject it, or counter with different terms. Portland home buyers who request a concession should be prepared to negotiate and possibly adjust their strategy.
Depending on the type of mortgage loan you use, you’ll probably have a limit as to how much of a concession you can use.
Different mortgage programs have different limits when it comes to seller concessions. Portland home buyers who plan to ask for such a contribution should check with their lender first, to see if there’s a limit.
Here’s an overview of the limits for different types of loans:
Exceptions to these general rules might be allowed in some cases.
Portland home buyers should also take local market conditions into account before requesting a closing cost contribution. In a competitive real estate market, this kind of strategy might actually work against you.
In a hot market, where sellers often receive multiple offers from buyers, offers with “strings attached” sometimes fall to the bottom of the stack. Sellers have the luxury to pick and choose what they feel is the best offer of the bunch.
In a slower market, on the other hand, a seller might be more motivated to offer concessions such as closing costs contributions. They do this to attract buyers, at times when there are fewer of them in the market.
Similarly, a home that has been sitting on the market for a long time could present opportunities for buyers. The seller in this scenario might be motivated to expedite the process, even if it means providing a concession to the buyer.
The Portland real estate market can be a fairly competitive due to limited inventory and steady demand. But that’s a broad generalization. Market conditions can fluctuate over time, favoring buyers one year and sellers the next.
If you want to request a seller concession or want to learn more about using seller concessions when buying a home in Portland, check with your real estate agent or do your own market research to determine if it’s a wise move. They’ll also provide with several Portland home buying tips to ensure a successful transaction.
If you’re looking to buy a home in Portland and need some guidance getting a mortgage, we can help. At Sammamish Mortgage, we’ve been helping borrowers in the Pacific Northwest, including Portland, OR, with their financing needs since 1992. Reach out to us to get an instant rate quote and have all your financing questions answered!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.