mistake cost me $1,000; 2% concession

[Elizabeth O.]

After just searching the forums  I know that the 2% concession has been discussed and I now wish I had read those posts but I wanted to give a heads up again so someone doesnt go through what I just went through.

This is my second investment property but first one with HUD. When my realtor submitted my bid to HUD, she put down $3,000 closing cost assistance which is 3% of the purchase price. I now know that the max seller concession on an investor loan is 2% of the purchase price. My Lender caught this and my realtors just told me that we would address it later.

So its coming up on my close and my realtor tells me that if I would like we can add an addendum to change it to 2% and reduce the sale price by $1,000. Either way HUD nets 91K. Well, yes of course I want to do this but, I am now being told that my realtors office manager contacted the asset manager who told her no way and that the only way to do it was to release the contract and put in another offer.

I feel as though this could have been avoided if I had been aware that the max seller concession on an investor loan is 2% of the purchase price.   I'm moving forward anyway but i'm just a little ticked that my realtor didnt know this and that she still gets her $3,000. 

Here is what my bid bummary looked like if you are curious. 

Bid Summary:

3. Agreed purchase price of the property is:$100,000

5. Seller will pay reasonable and customary costs, but not more than actual costs, nor more than paid by a typical Seller in the area, of obtaining financing and/or closing (excluding broker’s commission) in an amount not to exceed.$3,000

6a. Upon sales closing, Seller agrees to pay to the broker a commission (including selling bonus, if offered by seller) of:$3,000

6b. Upon sales closing, Seller agrees to pay to the broad listing broker (if broker identified is not the broad listing broker):$3,000

7.Net amount due to seller: $91,000

8. Purchaser is :Investor

Lesson learned on my part.

[Greg H.]

Hud will allow for a home warranty to be paid for out of the concession so order the most expensive warranty with all the bells and whistles.  You can always cancel the warranty after closing and receive a pro-rated refund.  A survey might be allowed outside the 2% as well