In many cases, selling a home involves negotiation. One tool that helps attract buyers is that seller concessions are seller concessions that help attract buyers, stop handling them, or make them faster. Instead of reducing the asking price, you can offer to cover certain costs or provide credits that reduce the buyer’s upfront costs
Whether you’re selling your home in Seattle, Washington, Austin, Texas, or Chicago, Illinois, this Redfin guide will show you examples of sellers’ concessions, why they matter, and how to find out when to offer them.
What are seller concessions?
Seller’s concessions are incentives that sellers agree to provide during the home sales process. They usually involve covering or offsetting some of the buyer’s costs.
Common concessions are:
Payment of closing costs, such as escrow, title insurance, or loan origination fees, provides cedits to flag households during inspections that contribute to reducing home guarantees, to contribute to the purchaser’s interest purchase.
In short, concessions don’t change the price of your home, but they change the financial situation of the buyer.
When does seller concessions make sense?
Seller concessions often appear during negotiations and help smooth out cost and timing challenges. These are the most common situations.
During Inspection Negotiation: If a problem is discovered during an inspection of the house, the seller may provide credit in exchange for completing the repair. If funding requires modification: Some loans (FHA, VA) require a home to meet certain criteria. Seller’s concessions can cover costs. In slower markets, concessions can help attract budget-conscious buyers. At a faster nearer point, sellers may offer credit and encourage quick timelines.
Examples of common seller concessions
Seller concessions help speed up home sales without lowering listing prices. They will enhance the appeal of your home and attract potential buyers. Understanding various seller concessions is beneficial for determining the best strategy and making informed decisions as a seller.
1. I’ll repair the credit
One of the most common seller concessions is to provide repair credits instead of fixing the issue yourself. This saves sellers time and gives buyers the flexibility to handle updates after closing.
Example: During the inspection, the buyer’s inspector focused on aging water heaters. The seller offered it in exchange for $1,500 in credit upon closing.
Why does it work:
Saves sellers time and repair hassle. It gives buyers the flexibility to modify or upgrade their timeline.
When to use:
Common during inspection negotiations. It works well in a market where buyers expect a ready home.
>>Read: Your Guide to Selling a Home That Needs Repair
2. Closure fee support
Another popular seller concession is to support the costs of closing. These advance costs can add thousands to the buyer’s total, and credits from the seller can make your home stand out.
Scenario 1: In a slower market, sellers will offer $5,000 for closing costs (escrow, title, lender fees).
Why does it work:
Reduce buyers’ advance payment costs. Make your home more competitive without lowering prices.
When to use:
It is particularly effective in a sluggish market where buyers have more leverage. It is common on expensive subways with sudden closure costs.
3. Buying interest rates
Interest rate buyouts are a very effective seller concession, especially with current mortgage charges. This will make monthly payments more affordable for buyers and increase the number of potential offers they receive.
Scenario 1: As buyers grow to pay monthly payments, sellers cover their mortgages to “points” to lower interest rates.
Why does it work:
Make monthly payments more affordable for buyers. Expand the pool of eligible buyers.
When to use:
When interest rates rise. If you want to have access to your home for buyers on a budget.
>>Read: When it makes sense to buy interest rates on your mortgage
4. Other common seller concessions
Beyond major credits, sellers sometimes use smaller perks to sweeten the deal. These examples of seller concessions are not too expensive, but can make a huge difference to the buyer.
Home Warranty: We offer a one-year home warranty to reassure buyers about their old systems. “AS-IS” credit: Provides a set amount instead of managing multiple small repairs. Inclusion of personal property: Leave electrical appliances, furniture or outdoor equipment. Cosmetic Allowance: Credits for paint, flooring, or any other renewals that the buyer may wish for. Flexible closure or leaseback: Adjust your timeline to allow buyers or sellers to move smoothly.
How to use seller concessions strategically
Seller concessions can greatly improve the desirability of your home and accelerate its sales. However, as with negotiation tactics, their effective use depends on the right timing and application.
Final tips to keep in mind:
Prices with concessions in mind: Consider possible concessions when determining a listing price so that you don’t sacrifice profits. Don’t lead with concessions: start with price and value first. Use concessions only as a negotiation tool. Frame them as the buyer’s profits. Put everything in writing: To avoid misunderstanding later, clearly document your concessions in your purchase agreement. Know your limits: Set boundaries in advance so that you are not pressured to provide more than comfort.
If strategically planned, seller concessions can benefit both parties by reducing buyer costs, closing deals more quickly, and allowing profits to be protected.
Seller’s Concession FAQ
1.Do seller concessions affect the value of the home?
Seller concessions do not directly alter the value of the valuation. However, the unusually high concessions can lead lenders to question whether prices reflect market value, which could affect loan approval.
>>Read: What is a house evaluation? Everything you need to know about the home assessment process
2. Instead of offering concessions, can you fix the issue yourself?
Yes, but it depends on your priorities. Repairs provide cost management and appeal to buyers looking to prepare for move-in, but concessions save time and stress and provide buyers with flexibility. If you need quick sales, concessions are easy. If buyer trust is important, completing repairs in advance is more appealing.
3. Can offering a seller’s concession make the buyer suspicious?
Rather than offering unusually generous concessions that buyers may doubt the hidden issues of the home, sellers should combine concessions as value-added, such as supporting the closure costs, so that buyers have more cash for renewal.
4. Is seller concessions more common in certain housing markets?
Yes, seller concessions are more common in slow or high-cost real estate markets. This is because buyers have greater bargaining power or are facing higher initial costs. Conversely, in highly competitive hot markets with numerous offers, sellers are less likely to offer concessions as there is already strong buyer interest.
5.Do seller concessions have tax implications for home sellers?
Seller concessions generally reduce the amount they take back from sales, but differ in how they are treated for tax purposes. For example, a $400,000 sale with a $10,000 concession could result in net revenue of $390,000. Tax rules can be complicated, so it is important to check your particular situation with a qualified tax professional.
