When Sellers “Pay” Minneapolis Duplex Buyer Closing Costs… They Really Don’t

Every market cycle, this one comes back around. And I’ve been hearing it a lot from seller’s right now.

“I already gave up money for the buyer’s closing costs. I’m not doing any more.”

The sellers feel like they made a sacrifice. That they were generous. And that any further concessions, on, for example, an inspection item, is a sign of ungrateful buyers.

Here’s the problem with that logic.

The buyers are the ones actually paying the closing costs. When they ask a duplex seller to pay them, all they’re really saying is, “Can we fold them in to our loan? Otherwise, we have to take them out of our savings account.”

In other words, in order to purchase the duplex, the buyer not only has to take the down payment out of their account, but roughly an additional 3% of the entire purchase cost for prepaids and closing costs.

That can make or break a deal for many buyers.

And the fact is, regardless of their means, most buyers would rather use the bank’s money to pay these expenses than their own. After all, money is a hard thing to save.

So where does the money come from? The buyer’s loan, which is secured by the property.

Sellers don’t reach into a separate checking account labeled “buyer gifts.” Any seller-paid closing costs are baked into the price or concessions negotiated off the price.

If a duplex sells for $400,000 with $12,000 in seller-paid closing costs, what actually happened?

It sold for $388,000 net to the seller.

And if the seller refuses to give the buyer a credit toward closing costs, then the buyer would likely only be willing to pay $388,000 for the property.

Sometimes sellers think, “But the one down the street sold for the full $400,000.” Maybe. Maybe not. The only way to tell is by looking at the sold listing on the MLS, where it will chronicle whether seller paid concessions were part of the purchase price.

And if they were, appraisers adjust for concessions.  If similar duplexes are selling at $385,000 with no concessions and yours is $400,000 with $15,000 in seller-paid costs, the appraiser says, “Net price $385,000.”

If the numbers don’t support it, the deal doesn’t appraise—and suddenly that “seller-paid” closing cost becomes a renegotiation problem.

From a seller’s perspective, paying the buyer’s closing costs is often cleaner than dropping the price outright.

And from a buyer’s point of view, folding them into the loan helps preserve their savings.

As we move into a more balanced Twin Cities duplex market, buyers asking the sellers to “pay” their closing costs is likely to become more common.

Remember, it isn’t a concession or a sacrifice. It’s just a way to include them in the buyer’s loan.