Which is best to use part of realtor's commission - home price reduction? or Closing cost?

Question

I am buying a new home. Builder pays a part towards closing cost. Also realtor pays part of commission. Now I have two options to utilize the realtors commision. Please advise which is best - ask for price reduction or utilize towards closing cost?

Answer 1

I'm surprised the builder is allowing  part of the agents commission to used  be toward your purchase - many frown on this. Not to mention, your agent gets paid for questions like this ... please let your agent do the job they were hired to do.  

Answer 2

You don't get to decide where the commission goes...the builder pays the Realtor...not you.

Bottom line.

Answer 3

Unless you are paying cash for the house, you'll need financing.  Before you make a decision as to which costs should be paying, get prequalified by the lender.  Some loans allow some fees to be paid but not others.  Look at the whole package and see what is best for you.

Most times, you don't need to make the decision until the loan is ready to fund.  

Answer 4

If you had an extra $50,000 (or whatever) sitting in your pocket right now, would you use it to reduce the mortgage or use it for something else (invest it, buy a boat, whatever).  If you would use it to reduce the mortgage then have the commissions go towards a house price reduction, otherwise use it to go towards closing costs (realizing you will have a larger mortgage).

Answer 5

It depends on the type of loan you are getting.  FHA is the most offered in today's marketplace does not allow any 3rd party money after Oct 1st.  Most lenders are not allowing now to prevent any issue come the start date.  

If you are going with a Conventional mortgage look at the bottom line of each.  Will less money out of pocket be better for you?  Use it towards closing cost.  Will it lower your mortgage enough to lower your payment to a more comfortable level?  Use it towards the cost of the property.