What are sellers concessions?

When you purchase a home, make sure to talk to your mortgage industry professional about the possibility of sellers concessions. Simply put, these concessions are a set dollar amount or percentage of the purchase price that a seller agrees to contribute to you, the buyer, towards your closing costs. This can help to either lower the amount of money you are required to bring to the closing table, or help you bring none at all. These contributions are financed over the life of the loan with the purchase price, so make sure to ask your loan officer if concessions would be a good decision for your situation and if they are allowed with the loan program you are using.

In a buyers market, seller concessions are common. Make sure your real estate agent has experience negotiating these terms.

More generally speaking a seller concession can be any negotiation where the seller gives something up to the buyer. For Example if there is some problem or updates that are needed in the house; often a seller will offer the buyer a concession of a lower sales price leaving the repairs or updates to the buyer to do later and pay for on their own. This would be an alternative to the seller having the repairs or updated done before closing, paying for them and selling the home at full price.

In most places across the country a buyer's market is occurring, so seller's concessions will come from the existing price of the home. There are a few places that still have a seller's market in place. For these places, your Realtor will be able to guide you in offering a ramp up on the price so any concessions asked for will not hurt the seller and make your offer more powerful.

Seller-paid concessions, when used properly, can mean the difference between closing a home sale and losing one. A concession is anything of value added to the transaction by the seller, builder, developer, salesperson or any interested party. A concession may also include any closing costs that would normally be paid by the buyer or cash given to the buyer to lower non-housing debts. Funds received from a relative to assist with a home purchase, or cash contributed from an employer as part of a corporate transfer are not considered seller concessions.

With 100 percent financing through VA and USDA as well as low down payments with FHA becoming more and more popular these days so are seller concessions. With the combination of a seller concession and a zero or low down financed loan, it is becoming increasingly common for a home-buyer, even a first time home-buyer, to buy a home with no money down and no money out of their pocket at all. Buying a home with no money out of pocket can help a you to save your own money for all of the costs that are associated with buying a home.

Let us help you get into your new home with zero closing costs!