There are many benefits of seller concessions. Seller concessions are closing costs that the seller has agreed to pay. Sometimes, you can ask the seller to contribute to specific closing costs. Other times, sellers may just pay a percentage of the total closing costs.
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Who benefits from seller concessions?
BOTH! For the seller, offering concessions can entice potential buyers, especially in a buyer’s market. For the buyer(s), seller concessions can help if they don’t have cash on hand to cover all their closing costs, or to save money on the life of the loan with buydown points.
The Advantages
One of the benefits of seller concessions is that it allow you to pay less out of pocket at closing. This makes homebuying more affordable. Also, if your seller concessions go towards points, this will save you money in the long run if it’s used to buy down the rate. Remember, $10,000 off the purchase price is much less beneficial to you than $10,000 used to buy down the rate even half a percent.
The Disadvantages
On the other hand, asking for seller concessions might make you a less appealing buyer, especially in a seller’s market. Moreover, most sellers are looking for offers that don’t have a lot of strings attached. So, make sure you consult with your real estate professional before bringing it up.
How do you negotiate seller concessions?
Asking for concessions is all about negotiating and understanding the current housing market. With this, your real estate agent should help guide you with this one and let you know whether you’re in a buyer’s or seller’s market. Additionally, your agent can also find similar properties that were sold with concessions and present them to the seller. Presenting examples of recent seller concessions can motivate your seller to work with you.
So if you do decide to ask for concessions, you might want to limit your other demands to remain an appealing option for the sellers.
Once you receive a loan estimate, talk to your lender and realtor to see how seller concessions might help you out. Reach us today so we can discuss further.