What are seller concessions? What to consider

In the intricate world of real estate transactions, various terms and concepts can seem daunting to both buyers and sellers. One such term that frequently arises is “seller concessions.” In this post, we will talk about what seller concessions are, demystify them, explain why they’re used, and provide examples to illustrate their significance in real estate deals.

Seller concessions, sometimes known as “seller contributions,” are a regular feature in real estate transactions. They are essentially a negotiating technique used to sweeten the bargain for potential purchasers. Seller concessions entail the seller offering to cover some of the buyer’s closing costs or other expenditures related to the property transaction.

What are concessions used for?

Seller concessions serve several important purposes in a real estate transaction:

Attracting buyers

Offering concessions can make a property more attractive to potential buyers. In a competitive market, this can help a property stand out among the listings.

Easing the financial burden

Buying a home involves various expenses, including closing costs, loan origination fees, and inspection fees. Seller concessions can help alleviate some of these financial burdens for the buyer.

Closing the deal

In situations where a buyer is financially constrained, seller concessions can be the deciding factor that enables the transaction to close successfully.

Negotiating leverage

Sellers can use concessions as a bargaining chip during negotiations. It can be a way to find a middle ground when both parties have differing expectations.

What are concessions examples?

Seller concessions come in various forms, with the most common being:

Closing cost assistance

This is perhaps the most prevalent form of seller concession. The seller agrees to cover a portion or all of the buyer’s closing costs, which may include fees for the appraisal, title search, and attorney fees.

Home warranty

Sellers might offer to purchase a home warranty for the buyer, providing peace of mind against unexpected repairs or appliance replacements.

Repair credits

Instead of making repairs to the property, the seller can offer a monetary credit to the buyer, allowing them to address any necessary fixes after the sale.

Interest rate buydown

In some cases, sellers may agree to lower the interest rate on the buyer’s mortgage for the initial years, effectively reducing the buyer’s monthly payments.

Personal property inclusions

Sellers can include personal property, such as appliances or furniture, as part of the deal without charging the buyer separately.

Seller concessions are a valid real estate tactic that benefits both buyers and sellers. They can be used deliberately to speed up deals, entice potential buyers, and forge mutually advantageous agreements. Understanding the concept of these is critical for everyone working in real estate since it can have a big impact on the result of a transaction. Seller concessions are worth consideration in real estate discussions, whether you’re a buyer searching for financial relief or a seller looking for a competitive edge

Written by Vanessa Gallanti. October 4, 2023

Enthusiast about planning, project management, construction materials and technology, and construction. A civil engineer from Los Andes University and a content writer for Kukun.