The U.S. real estate market has been so hot over the past few years that many buyers may not have ever heard of seller concessions. With interest rates and inflation rising, the market has slowed down over the past couple months, meaning there may be more motivated sellers willing to make concessions. Here’s what they are and how they might affect your next home sale or purchase.

Seller Concessions Defined

Seller concessions are when the home seller agrees to pay for fees for the buyer to help make the sale happen.

Common Seller Concessions

There are several items sellers can offer to pay for to make the deal sweeter for the buyer.

These might include paying for property taxes through the end of the year

• Title insurance
• Home inspection fees
• Appraisal fees
• Recording fees
• Loan origination fees
• Mortgage points

Sellers can also offer concessions in the form of home repairs or improvements before the sale is final.

Negotiating Sellers Fees

• All negotiations of seller concessions will be done through your real estate agent.
• Negotiations can take time, but a trustworthy agent can help you reach a deal.
• As a buyer, prioritize your biggest requests, like closing cost money or repair help.
• Know your market and avoid asking for too many concessions, or the seller may back out.

There are also some rules associated with seller concessions. For example, if you put down less than 10% for a down payment on a conventional loan, seller concessions are capped at 3% of the loan price. If your down payment is greater than 25% however, the cap grows to 9%. FHA and USDA loans have a 6% cap on seller concessions, and VA loan allow for up to 4%.

Benefits to Buyers

Buyers may be more inclined to go through with a sale if they can feel like they are getting a discount. Or if issues have cropped up during the home inspections, buyers may be more willing to stick it out if the seller offers to pay for repairs.

Benefits to Sellers: Understanding Seller Concessions

Sellers may need to sell quickly for various reasons: a new job in another city, an unaffordable mortgage, or needing equity for a new home. In these cases, seller concessions can speed up the process.

Whether you’re a buyer or seller, understanding seller concessions can help you maximize time and money in your transaction. Contact us today.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.