When you’re selling your home, one of the most important things to consider is how a buyer plans to pay for it. The type of financing a buyer uses can directly impact the speed, certainty, and complexity of the transaction. As a seller, understanding the different types of financing—and how they affect your bottom line—can help you make smarter decisions when evaluating offers.
Here’s a breakdown of the most common financing types, what they mean for you as a seller, and how seller concessions fit into the equation.
What It Is: The buyer uses their own funds to purchase the home without involving a lender.
Why It’s Great for Sellers: Cash offers are typically the most attractive. They eliminate financing contingencies, don't require an appraisal, and often close faster with fewer complications.
Keep in Mind: While some cash buyers may offer slightly less in exchange for a quick and hassle-free sale, the security and simplicity they provide are hard to beat.
What It Is: A mortgage offered through a private lender and not insured by the government. These loans typically require good credit and a larger down payment.
Why It’s Strong: Buyers using conventional loans are often financially solid. These loans come with fewer appraisal and inspection hurdles, making them a popular and reliable choice for sellers.
Keep in Mind: Some conventional buyers may ask for concessions, but overall, these are considered strong, dependable offers.
What It Is: A government-backed loan available to qualified veterans and active-duty military members.
Why It’s Mixed for Sellers: VA buyers are often well-qualified, but these loans require a VA appraisal and can come with added conditions. Some costs must be paid by the seller, and the property must meet specific condition requirements.
Keep in Mind: You may be asked to pay certain fees or offer concessions to help cover closing costs.
What It Is: A government-insured loan that allows for lower credit scores and smaller down payments.
Why It’s More Challenging: FHA loans often come with stricter appraisal and condition requirements. The property must meet specific health and safety standards, which could mean repairs before closing.
Keep in Mind: FHA buyers frequently request concessions to help cover closing costs, and these loans may involve more negotiation.
What It Is: A government-backed, zero-down loan available for properties in designated rural areas and to buyers meeting income guidelines.
Why It’s Less Ideal: While helpful to buyers, USDA loans involve additional eligibility requirements and often require more time to process. Properties must meet strict condition criteria.
Keep in Mind: These buyers often request seller-paid closing costs (concessions), and the process can move more slowly.
What Are Seller Concessions?
Seller concessions are closing costs or expenses that the seller agrees to pay on the buyer’s behalf. These might include:
Loan origination fees
Title insurance
Prepaid taxes and homeowners insurance
Escrow and transfer fees
Repairs or home warranties
When Are They Common?
When buyers are using FHA, VA, or USDA loans
When buyers have limited cash for both the down payment and closing costs
When concessions are used to resolve inspection issues or compete with other listings
Concessions can be a powerful tool in closing a deal—but they also affect your net proceeds.
Want to know how concessions could impact your sale? We’d be happy to prepare a custom seller net sheet, showing how much money you can expect to walk away with at closing based on your unique situation.
Not all offers are equal. A higher price doesn’t always mean a better deal—especially if the financing is uncertain or comes with extra seller costs. At Bay Realty Michigan, we help our sellers evaluate every offer in full, from financing to contingencies, so you can make the smartest decision possible.
Have questions about an offer you’ve received or thinking of listing your home soon? Reach out—we’re here to help you navigate every step with confidence.