What Are Seller Concessions?
A Seller Concession is when a Seller of a home agrees to pay part of the Buyers closing costs. This takes some of the financial burden off of the Buyer.
Who Are Seller Concessions For?
Seller concessions can be helpful for buyers who determine they are having trouble covering all of the costs associated with the home buying process.
This can make a Seller Concession especially useful for first-time home buyers.
First-time home buyers who aren’t familiar with the mortgage process run into unexpected costs such as purchasing homeowners insurance, an inspection, or creating an escrow account with their lender. They soon realize that it is not as simple as getting approved for a loan and having just the liquid funds available for a down payment. Requesting a seller concession could lighten the financial load of these costs.
Concessions can help out the seller as well. If they’re not having much luck selling their home, offering concessions can make the deal look more attractive to prospective buyers.
How Do Seller Concessions Work?
Buyers might ask for concessions if they feel the house is more than they were prepared to afford or if they think they’ll have trouble covering their closing costs. Sometimes they might ask for concessions if a home inspector finds issues that are going to cost money to fix that they were not anticipating.
What Can a Seller Pay For?
There are so many costs associated with buying a home, the seller might be willing to cover some of the fees associated with the processing and securing of your loan. Some of these fees include:
- Property taxes
- Attorney fees
- Origination fee
- Title insurance
Why Would a Seller Help You Pay?
Maybe they want to complete the sale quickly because they’re also purchasing a house and don’t want to own multiple homes. Perhaps their house has been on the market for a while and they haven’t received offers they approved of.
The more eager the seller is to sell their home, the more likely they are going to be to helping the buyer out with their closing costs.
There are limits to the amount a seller can contribute. These limits will depend on the type of loan you’re getting, how much you’re putting down and whether you’re purchasing a primary residence, second home or an investment property.
Please make sure to discuss this with your Mortgage Loan Officer to understand the maximum seller concession allowed with your financing situation.
Ready to start the home buying process? Get Started with us online, or call (877) 696-3956 to speak with one of our Home Loan Experts.