WHAT IS A “ONE TIME CAPITAL CONTRIBUTION”?
September 13, 2016 | Richard Sites
Frequently in an MLS (Multiple Listing Service) listing you will find a phrase which reads, “One time capital contribution of $ ____ due at closing” or even worse, “Buyer to pay one time capital contribution of $ _____”. What’s the deal with this? Is it hurting your chances to sell?
Simply put, the Homeowner’s Association is hitting all new owners with a charge to fund their reserves.
Do I Have to Pay The Capital Contribution When Purchasing?
Everything is negotiable in a real estate transaction. The key is to d out in advance that this money is due then make an offer which reflects your position.
Unfortunately, most listing agents put this information in the listing data field called Broker Only Remarks which means the house is actually listed for more than the published listing price once you add in the Capital Contribution. Let’s look at an example:
In this morning’s MLS, I found an expired listing in Tequesta where, in the Broker Only Remarks, was the comment “Buyer to pay $1,885 capital contribution”. This effectively means the house is listed for $1,885 more than the listing price. Where should this information be listed?
Put this in the “Public Remarks” so buyers know about it
When selling, I would suggest that you put this information in the listing category field called Public Remarks so that potential buyers know about it ahead of time. Nobody likes surprises, especially when they involve money.
Remember those little charges you found on your last automotive repair bill, like “Shop Fees” or “Disposal Fees”? Even though the amount of money is small, nobody like surprises.
What’s The Solution?
There are 2 easy solutions which will eliminate the surprise and make things go more smoothly:
List the capital contribution in the Public Remarks. This way buyers will know about it ahead of time and can plan accordingly.
If you are selling, pay the money due and just raise the price to cover it. Your home listing price is really just a “range” and could be adjusted up or down slightly without effecting the value proposition to buyers. This will give you an advantage over other homes for sale in the neighborhood where sellers are asking buyers to pay.
You will get your home sold by using imagination and increasing your value proposition to buyers, nothing more. This is why lowering the price is considered an important step when a home is not selling. People want a good deal, not a nasty surprise and they don’t want to feel like they are being “nickle and dimed” to death.
Remember, Hope is Not an Effective Selling Solution!
If you are considering selling, or having trouble selling, and want to have confidential discussion on your situation, please contact me at 561.762.4073 or use the form below.