What Are Seller Concessions in Real Estate? Here’s What You Need to Know
When buying a home, you’re likely focused on the price tag, but don’t forget about the extra costs that can add up quickly. Things like closing fees, home inspections, and repairs can eat into your budget. Luckily, in some cases, you can ask the seller to help cover some of these costs through what’s known as seller concessions. Here's a breakdown of what they are and how they can work to your advantage.
What Are Seller Concessions?
Seller concessions are when the seller agrees to cover a portion of the buyer's closing costs or expenses, reducing the upfront costs for the buyer. For example, the seller might pay for repairs found during the home inspection or cover fees like the appraisal. The seller doesn’t have to agree, but it can be a good way to keep the deal moving forward and make the buyer happy.
It’s important to note that seller concessions don’t mean the buyer will get cash back. Instead, the seller typically agrees to put part of their home sale proceeds toward the buyer’s costs.
Who Benefits from Seller Concessions?
Both parties can benefit from concessions. The buyer gets help with costs, while the seller makes their property more attractive to potential buyers.
However, the market conditions play a big role. In a buyer’s market (when there are more homes for sale than buyers), sellers are often more willing to offer concessions to close the deal. On the other hand, in a seller’s market (when there are more buyers than homes available), sellers may not be as open to paying for extra costs.
What Kinds of Costs Can a Buyer Ask the Seller to Cover?
Buyers can request concessions for a variety of expenses, either in their initial offer or during negotiations. Some common examples include:
- Repair costs from issues found during the home inspection (e.g., plumbing or HVAC problems)
- Appraisal and home inspection fees
- Mortgage discount points (to lower interest rates)
- Title insurance
- Recording and attorney fees
You might also hear discussions about who pays the real estate agent commissions. Historically, the seller handled these costs, but following recent legal changes, this can now be open to negotiation as well.
Limits on Seller Concessions
The amount a seller can cover depends on several factors, including the type of mortgage, the size of the down payment, and the kind of property. Here’s a general guide:
Bottom Line
Seller concessions can help reduce the costs that buyers need to cover upfront. Common requests include asking the seller to pay for repairs or services like a home inspection. However, concessions depend on the market, the type of loan, and the seller’s willingness to negotiate. They’re most likely to be successful in a buyer’s market, where sellers are more motivated to make a sale.
Original article at: What are seller concessions in real estate? (msn.com)
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