If you’re selling a home, you may have heard the term “seller concessions” before. Seller concessions are a common part of real estate transactions and can be a valuable tool for sellers to attract buyers and close a sale. In this article, we’ll explain what seller concessions are and how they work.
What are seller concessions?
Seller concessions are a way for a seller to help a buyer pay for closing costs or other expenses related to the purchase of a home. Essentially, the seller agrees to give the buyer a certain amount of money or credit that can be used to cover these costs.
Closing costs are expenses that buyers typically incur when purchasing a home, such as fees for appraisals, title searches, and loan origination. These costs can add up quickly, often amounting to several thousand dollars. By offering seller concessions, sellers can help offset some of these costs and make their home more appealing to potential buyers.
How do seller concessions work?
Seller concessions can take many different forms, but they all involve the seller giving the buyer some form of financial assistance. Here are a few examples of common seller concessions:
1. Paying some or all of the buyer’s closing costs. The seller can agree to pay a portion or all of the buyer’s closing costs, up to a certain dollar amount or percentage of the sale price.
2. Offering a credit for repairs. If the home needs repairs or upgrades, the seller can offer a credit to the buyer to cover some or all of the cost of these repairs.
3. Providing a home warranty. The seller can offer to purchase a home warranty for the buyer, which can provide protection against unexpected repairs or maintenance issues.
4. Offering to pay for points. If the buyer is taking out a mortgage, the seller can agree to pay for points, which are fees paid to the lender to lower the buyer’s interest rate.
Seller concessions are typically negotiated as part of the purchase agreement. The seller and buyer will agree on the amount of the concession and how it will be applied. For example, the seller may agree to pay up to $5,000 in closing costs or offer a $2,000 credit for repairs. The concession is typically included in the purchase agreement and reflected in the final sale price.
Benefits of seller concessions
Offering seller concessions can provide several benefits for sellers, including:
1. Attracting more buyers. By offering to help with closing costs or repairs, sellers can make their home more appealing to a wider range of buyers.
2. Closing the sale more quickly. Buyers may be more likely to move forward with a purchase if they know the seller is willing to help with some of the costs.
3. Easing the financial burden on the buyer. Buying a home can be expensive, and offering seller concessions can help ease the financial burden on the buyer.
4. Potentially increasing the final sale price. Offering seller concessions can make a home more attractive to buyers, which could lead to multiple offers and a higher sale price.
Seller concessions can be a valuable tool for sellers who want to attract buyers and close a sale. By offering to help with closing costs, repairs, or other expenses, sellers can make their home more appealing to a wider range of buyers and potentially increase their final sale price. If you’re selling a home, it’s worth considering whether offering seller concessions could be a good strategy for you.