What are Seller Concessions?
When you purchase a home, there are closing costs and other fees that you must pay to get a mortgage. In general, closing costs make up between 2% and 6% of the total price of your new home. Sometimes it is possible to negotiate with the seller to get them to pay some of the buyer’s closing costs, which would benefit the buyer. Seller concessions are not always requested, but could be beneficial to both the buyer and the seller in certain situations.
A new home buyer may request specific concessions that will help them cover closing costs or receive a better deal on their new investment. The previous homeowner may also agree to pay seller concessions to assist with repairs that were discovered during the inspection, or cosmetic upgrades that were put off to sell in a quicker timeline.
Seller concessions tend to be used more often in a buyer’s market than in a seller’s market. A buyer’s market is when there are more homes available with not as many buyers. This type of market provides a homebuyer with more leverage since homes are not being sold as quickly as in a seller’s market.
There are certain limits to seller concessions. The amount that the seller can pay may depend upon a few different factors. Your loan product may have explicit guidelines that determine a maximum amount that the seller can contribute.
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