6 ms·
Similarly, why do sellers pay closing costs for houses? Makes zero sense. The money is flowing from the buyer to the seller. It also inflates the price of the h
by CalChris 9y ago
Similarly, why do sellers pay closing costs for houses? Makes zero sense. The money is flowing from the buyer to the seller. It also inflates the price of the house since the buyer has to pay the seller to pay the closing costs. Then you have to pay mortgage interest and property tax on that inflated value.
I paid closing costs when I bought, and as my realtor said, it's like free cable. It's not a massive savings but it's free cable every month.
- terravion 9y agoHaving the seller pay closing costs essentially allows the buyer (the buyer always pays transaction costs from an economic perspective) to pay the closing costs through the mortgage. I.e. the house costs 10% more, but you can mortgage it, instead of an extra 10% out of pocket. The rationale, from the VC's perspective for the company paying for a priced transaction is the same. Really this is a way of making the LPs of the fund pay for the transaction (i.e. their money given to the company to pay the transaction) rather than the VC having to pay transaction expenses out of their fees.