Buying and moving into a new home is one of life’s great experiences, especially if you’re buying your first home. From getting that pre-approval to the “yes!” response on an offer to closing and moving in, every step is exciting. And while the process is engaging and fun, it’s important to prepare for moving day […]
What are seller concessions?
Seller concessions are contributions given to the buyer by the seller to use towards closing costs, repairs or even to buy down the interest rate. There are separate expenses related to buying to home other than your mortgage, and seller concessions can help offset those costs.
Whether you’re ready to buy a home or plan on putting your home on the market, seller concessions can be a powerful tool.
If you’re buying, seller concessions can help save on closing costs
The fees may vary with every home purchase; these are some standard recurring and one-time payments that may be covered by seller concessions:
- Property taxes
- Title insurance
- Loan origination fees
- Home inspection fees
- Appraisal fees
- Mortgage points
If you decide to ask for concessions, ask your real estate agent to review the potential benefits. They will do some research for you and help you determine if you should ask for concessions or put in a lower offer.
If you’re selling, seller concessions can help you sell your home faster
If you’re selling your home offering seller concessions can help bring in buyers, especially if it’s a buyer’s market. This is beneficial if you are also purchasing a new house and don’t want to pay for two mortgages.
When to ask for seller concessions
Generally, seller concessions are used by buyers when they recognize that they have an advantage with the seller. Maybe the home has been on the market for a while, or if the inspection came in less than perfect. In those cases, the buyer can use their leverage to ask for a concession rather than ask for the seller to fix the inspection issue themselves or lower the price.
However, seller concessions aren’t always a good option. They can make you a less appealing buyer if the house has multiple offers and the seller is looking for a sale that doesn’t have “strings attached.” In that case, putting in a lower offer and covering closing costs yourself may be best.
When you’re the seller, be sure you can cover these concessions’ costs.
Ask your lender about seller concession restrictions
Remember that seller concessions cannot cover all closing costs, and some loan programs don’t allow concessions or limit their use. When applying for a mortgage, the loan officers at SmartMortgage.com will discuss loan program guidelines and any seller concession restrictions with you.