Using Seller Credits in Today’s Market: Best Practices

Utilizing seller credits to bridge the gap in buyer-agent compensation is just one of many tools you can use during the negotiating process. But like most things, you can go from “hero” to “zero” when utilized incorrectly.

Let’s recap some best practices to use when deciding if a seller credit is right for your client:

1. Reference this handy matrix HERE that illustrates the maximum amount you can request based on the type of loan (conventional, FHA, VA, non-conforming), the occupancy type and the loan-to-value ratio.

2. Find out if the borrower wants or needs any closing cost credits to qualify for the loan. If the borrower has a maximum of $6000 eligible and needs $5000 of that to qualify for the loan, that would only leave $1000 that could be used towards buyer agent commission.

3. Communicate with the loan officer on any potential purchase that would require a credit to cover commissions. You may not be privileged to discussions the loan officer and client have already had, but doing this demonstrates that you are working collectively for the good of your client.

4. If you do indeed utilize seller credits to cover buyer agent compensation, it is imperative you inform the lender. Just having it on the contract isn’t sufficient as it will be applied towards traditional closing costs and provide an inaccurate picture to the buyer of funds needed to close.

I think we can all agree that when expectations are set and met (or exceeded), the likelihood of our client having a rave-worthy experience increases dramatically. Demonstrating this collaborative approach between you and your loan officer shows the buyer your value in helping them achieve their goals of homeownership — and they are more likely to refer you to family and friends.

Now, more than ever, demonstrating to your clients that you have a team of professionals behind you demonstrates your winning difference and why you should be their trusted real estate professional. 

Contact one of our Key Mortgage loan officers today to learn more.