What are Seller Concessions and How Do They Work?

August 27, 2018

What are Seller Concessions and How Do They Work?

The accumulating cost of everything associated with purchasing a home can be very overwhelming, even if you’ve been saving for a while. Everybody knows it’s important to save for a sizable down payment; however, unless you’ve been through the escrow process before, few buyers realize they need to be saving for their closing costs as well.

Now first things first, you’re probably wondering what closing costs even are. Closing costs include various fees such as lender fees, inspection fees, appraisal fees, possible HOA fees, etc. And sometimes, these fees are a substantial amount that you may or may not have expected. This is where seller concessions can sometimes come into play.

A seller concession is an amount of money a seller agrees to pay at the close of escrow. In general, the seller concession is used to pay for some of the closing costs on the buyer’s behalf. Other times, however, a seller may opt to concede money if the buyer requests repairs they are unwilling to make themselves.

It’s important to note that a seller concession is not necessarily a gift to the buyer. Often times, it is a legal way for buyers to incorporate their closing costs into their loan amount. That way, the buyer does not have to bring cash to the table at the closing of escrow. So, for example, if a buyer has $2,000 in closing costs that they do not want to pay now, they can raise their offer price by $2,000 and ask the seller for a $2,000 concession. As long as the home appraises for the purchase price offered, the seller does not lose any money and the buyer is able to pay back that amount over time.

A seller’s concession can mean the difference between a buyer being qualified to purchase the home or not. So as a seller, if you are open to the idea, you may expand the amount of people that can consider purchasing your home. Of course, it is always important to speak to a Real Estate professional or your lender when making any important decisions.

If you are thinking about buying or selling your home and have questions you’d like answered, we are happy to help!

We are full-time, experienced Realtors working in Queen Creek and the surrounding areas.  With decades of East Valley real estate experience under our belts,  we are here to answer any questions you may have.  Please do not hesitate to reach out to Karen Berg at 602.919.2375 or April Anderson at 480.272.1977.

We’re looking forward to hearing from you soon!

Karen Berg and April Anderson

United Brokers Group
21321 E Ocotillo Rd F113
Queen Creek, AZ 85142

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