Seller concessions are incentives or benefits that a seller offers to a buyer to facilitate the sale. Essentially, these concessions can make a home more affordable for buyers by reducing the amount of cash needed upfront. Let’s look at different types of seller concessions, why they are important to facilitating real estate transactions, and when you should use them.
Types of Costs Covered by Seller Concessions
When making an offer for the purchase of a home, buyers can request that the seller pay for specific costs related to the sale of the home. These items are specified in the purchase contract and paid for by the seller at the closing. These costs can include:
Closing Costs: These can include fees for loan origination, title insurance, and escrow services.
Repair Credits: Instead of fixing issues themselves, sellers might offer credit for repairs.
Interest Rate Buydowns: Sellers may offer to pay points to reduce the buyer's mortgage interest rate.
Home Warranties: Coverage for major home systems and appliances can be a selling point.
Buyer's Agent Commission: Sellers may offer to pay money designated for compensating the buyer’s agent. Note: Buyer's agent commissions are not set by law, are fully negotiable, and can be paid by the seller, the buyer, or by splitting the commissions between brokers.
Follow these steps to successfully navigate the homebuying process.
Read More
The Importance of Seller Concessions in a Home Sale
Seller concessions are an important negotiation tool for both buyers and sellers in any market, helping to expedite a sale that benefits both sides of the transaction. When a seller offers concessions, they lower upfront costs for the buyer, making their property accessible to more buyers.
Demand from buyers allows sellers to facilitate a sale that is close to or above their asking price. For buyers, the ability to negotiate for seller concessions increases the number of homes they can realistically purchase and gives them some leverage in the negotiation process.
Some Considerations for Buyers and Sellers
When deciding whether to request seller concessions, a buyer may need to consider what type of mortgage loan they will be using. Each loan program has different limits regarding the amount of seller concessions allowed. For sellers, the cost of offering concessions to may need to be weighed against the desire for a quicker sale.
In both cases, working with your real estate agent to understand how concessions fit into your overall strategy is crucial. A Sibcy Cline Realtor® can give you professional guidance during the negotiation process and find a balance that works for both parties, resulting in a smoother, more successful sale.
Don't let this myth stop you from checking into your options.
Read More