If you're getting ready to sell your home, you may hear your real estate agent mention something called "seller concessions." While it might sound like you're giving something up, seller concessions can actually be a smart strategy to attract buyers and get your home sold faster—especially in a market where affordability is a concern.
So, what exactly are seller concessions? And why might they benefit you, the seller?
Seller concessions are when a seller agrees to cover part of a buyer's closing costs as part of the sale. These costs can include things like:
Loan origination fees
Appraisal or inspection fees
Title insurance
Escrow fees
Prepaid taxes or insurance
Essentially, you're easing the financial burden on the buyer, which can make your home more attractive—particularly to first-time buyers or those using low-down-payment loan programs.
The simple answer: to make the deal work.
In many cases, buyers have enough money for a down payment, but not enough for both the down payment and the closing costs. Offering concessions can help bridge that gap and get you to the closing table. In competitive price ranges, it may be the key to securing a solid offer.
Also, seller concessions often don’t mean you're taking less overall—buyers may offer full price (or close to it) and just ask for a portion back to help with costs.
Yes. The maximum seller concession allowed depends on the type of loan the buyer is using:
Conventional loans: 3% to 6%, depending on the buyer's down payment
FHA loans: Up to 6%
VA loans: Up to 4%
Your real estate agent can help you understand what’s permitted and what's typical in your price range and local market.
Seller concessions are negotiated as part of the purchase agreement. For example, a buyer might offer $200,000 with $6,000 in seller-paid concessions, which means your net proceeds would be $194,000—unless the home was priced accordingly to absorb the cost.
It’s all about strategy, and every situation is different. Sometimes, offering concessions can be the difference between sitting on the market and getting under contract.
Seller concessions can be a helpful tool to broaden your buyer pool and close the deal—especially in a market where affordability matters. At Bay Realty Michigan, we help sellers weigh all the options to ensure your pricing and negotiation strategy work in your favor.
Have questions about how to use concessions to your advantage? We're here to help.