Not all of the calls I get in response to my Republic columns are irksome. I like the calls I get from real people, rather than Realtors or brokers. Very few of them are viable, in-the-market, potential clients, but that’s not why I write the column. On the other hand, a brief telephone call is not the best way for a person to wrap his mind around a new idea.
As an example, the first call I had yesterday was about the “Who pays whom” article. He was a very sweet man, but he insisted I must be wrong, because the seller of his home had paid his closing costs.
I explained to him that I write deals that way all the time, that I prefer to do things that way no matter what the buyer’s financial circumstances, because, for now at least, retaining your own cash is usually more profitable that the interest-cost of the additional borrowed funds.
But — emphasize that — but: It doesn’t matter. You’re paying your own closing costs either way. If you pay them in cash, you can watch the money come out of your checking account. But if “the seller pays the closing costs” all you’re doing is exchanging one price discount for another. Your money stays in your checking account because you are paying more for the home and financing the closing costs.
“But, but, but–,” he sputtered.
“I know. This is hard. If the seller hadn’t paid your closing costs, would the purchase price have been the same?”
“Hell, no!”
“So you took a three percent discount in closing costs instead of shaving three percent off the price.”
“That sounds about right.”
“So you borrowed three percent more than you would have done, if you had paid the closing costs out-of-pocket.”
Silence — the threshold of rhetorical surrender.
“So who paid the closing costs?”
“…When you put it that way…”
“Who paid for everything?”
“I’ll be damned if you ain’t got me convinced…”
If only my Realtor and broker callers were this reasonable…
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