Friday, November 21, 2008

How Much Money Can a Buyer Get Back at Closing?

Here's a question we get asked at just about every real estate training seminar we teach:

Q: How much money can a buyer get back at closing?

A: The most a buyer can get back is the amount of their earnest money, less any amount (if any) that they are required to contribute towards the purchase by the loan program guidelines. For example, if the borrower has paid $3,000 in earnest money and the loan program they are using requires a minimum contribution of $1,000, then the most they can receive back at closing is $2,000. If they get any more than that, it would be the same as if the seller was writing them a check for that extra amount. That's considered a seller inducement to purchase (a fancy term for kickback), and that is against the rules.

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