The Truth About Seller Concessions: What They Are & How They Help You

Navigating today's housing market can feel like a challenge, whether you're buying or selling. With listings staying on the market longer and buyers being more cautious, sellers are looking for ways to make their home stand out. One powerful tool that's becoming increasingly popular is seller concessions.

But what exactly are seller concessions? And how can they benefit you in your real estate journey? Let's break down this crucial real estate term.

What Are Seller Concessions? 🤔

What are seller concessions when buying a house? This is the biggest question right?

Knowing and understanding what seller paid concessions are is the first step!

Simply put, seller concessions are an agreed-upon dollar amount that the seller pays within the sales contract. Think of seller concessions as a credit from the seller to the buyer. When you look at a contract, you’ll often see it as the offer price minus seller-paid concessions. This amount is deducted directly from the seller's profit at the time of sale.

Seller paid concessions are basically an incentive to a potential home buyer.  Baically offering the buyer X amount of dollars they can use as a tool to lower their down payment, buy down their rate or pay for closing costs.

Who Pays for Seller Concessions? 💰

The seller. Technically, the seller is the one paying or "deducting" this amount from their final profit on the sale. However, for a buyer, it feels like they are receiving funds to help with their expenses. It's a win-win arrangement when used effectively.  

Seller Concessions can be considered seller paid concessions because the seller is the party taking less off the purchase price of the home for these real estate concessions to be credited towards the buyer.

In some instances the buyer needs these seller paid concessions in order to move forward buying a home. In some of these instances, the buyer will offer above the asking price to make up for the amount of seller concessions they are asking for.

Example 👇🏻

List price (seller asking price) 👉🏻 $250,000

Buyer offer price 👉🏻 $257,000

Seller paid concessions 👉🏻 $7,000

This way, the seller technically gets their asking price and the buyer gets the seller paid concessions they need in order to fund the closing.

Home buyer tip 💡

If you plan to do something like this example above, remember the home must still appraise (the home value) at the buyer offer price.  

What Can Seller Concessions Be Used For? 🤝

This is where it gets really interesting for buyers and sellers alike.

For a buyer, these funds are a game-changer, helping them reduce the amount of cash they need to bring to the closing table.

For a seller, offering seller paid concessions can attract more buyers to your property resulting in a quicker sale.

Seller concessions can be used to cover:

• Closing Costs: This is the most common use. Closing costs can be a significant expense, often running into the thousands of dollars. Using seller concessions to cover part or all of these costs can make a home far more affordable for a buyer. 💵

• Interest Rate Buy-Downs: With interest rates fluctuating, many buyers are looking for ways to make their mortgage payments more manageable. Seller concessions can be used to "buy down" the buyer's interest rate, leading to lower monthly payments over the life of the loan. This is a huge incentive! 📈

• A Portion of the Down Payment: In some cases, seller paid concessions can even be used to help a buyer with their down payment. This directly lowers the cash-to-close amount, making homeownership accessible to more people. 🏠

Why Seller Concessions Are Your Best Tool in a Buyer's Market 🛠️

In the current market, almost half of sellers are making real estate concessions to get their homes sold. With home prices having risen significantly, most sellers have substantial equity. This means sellers likely have plenty of room to offer these concessions and still walk away with a profit.

Think of seller concessions as a powerful tool, not a sacrifice. As a seller, offering these upfront in your listing can make your home stand out from the competition. For a buyer, it can be the key to making a home purchase affordable.

Whether you're selling your home or looking to buy, it's crucial to talk to a real estate agent about how using seller concessions can help you on your journey. They can provide expert advice and help you navigate this valuable tool to meet your goals in the housing market.

✅ Final Thoughts

Whether you're a seller or a buyer, real estate concessions should be thought of as a tool within the real estate transaction.  They can be really effective in helping the buyer afford to get into a home & a seller to move on to their next phas of life.

📞 Let’s talk about your move — whether it’s now or six months from now, I’m here to help you plan it right.

417-350-6419 | christina@thehouseofsparks.com