What are Seller Concessions?

According to a recent RE/MAX National Housing Report, home sales were up 37.7% in March 2023 compared to February 2023. However, interest rates are still hovering around 7%, the average days on the market was 40, and median sales prices rose 3.4%. The fierce competition for available homes has waned, and sellers may need to be a little more aggressive to attract buyers. 

One way that buyers can have more money to use for a down payment and other costs is to ask for seller concessions or credits. Simply put, a seller concession is an agreed amount the seller agrees to pay toward closing costs on the buyer’s behalf. It could be as little as a few hundred dollars, or in the thousands. Seller concessions can include helping pay for property taxes, loan origination fees, inspection fees, appraisal fees, attorney fees, recording fees, repair costs, or mortgage points.

Here are a few reasons why a seller concession may make sense:

1. Speed up the closing process. If the seller needs to sell the home within a specific timeline because of the need to move for a new job or close on another house they are purchasing, this can entice buyers to move quickly.
2. It gives the buyer more cash to make a larger down payment. How much a buyer puts down can mean the difference between getting a lower rate and not having to pay PMI (private mortgage insurance).
3. Makes the house more desirable in a competitive market. Even when inventory is low, buyers are looking to find the right home they can afford, and a seller concession may swing buyers in your favor.

Asking for a seller concession also has disadvantages. You may be left off the negotiating table if no other buyers have asked for a credit.

The best way to decide if you should request a seller concession during negotiations is to ask your real estate agent. They will gauge the market conditions and the seller’s situation and help you plot the best course on what to ask for. If you have other questions or would like to talk to one of the experts at NASB, call us at 855-465-0753.