What are Sellers Concessions
There are many intricacies with the world of mortgages and one of the less commonly known or utilized are seller concessions. This article will help to describe what they are and how seller concessions are used.
Simply stated a seller concession is the seller contributing to the buyer’s closing costs whereby the buyer will need to bring less cash to closing. They are more commonly seen in a buyer’s market. In a buyer’s market there is more housing inventory and sellers would either have to drop the price of the home and/or offer monies in the form of seller concessions also known as seller contributions.
This can be a powerful tool for first-time homebuyers who typically struggle to come up with enough money for the closing. It is also a great tool for sellers who are trying to entice a buyer to purchase their home.
Sellers concessions are used in two different ways. First, just to obtain more money for the buyers to reduce the overall closing costs or secondly, when repairs or concerns arise from the property inspection and the buyer wants to try to cover the known remedies.
Seller concessions are capped based on the amount of the down payment. The more you put down the more seller concessions you can request. The sellers concessions limits do vary differently between Government loans (VA & FHA) and Conventional loans.
You should consult your Loan Officer at Hall Financial for more information and guidance.