When it comes to selling or buying a home, negotiating smart strategies can make all the difference in a successful deal. One of the most powerful tools in the real estate playbook? Seller concessions.

So, what are they & how do they impact buyers and sellers, alike?

Whether you’re selling in a competitive market or buying your first home, understanding how seller concessions in real estate work can help both parties walk away with a win. Below, I’m breaking down what seller concessions are, how they benefit buyers and sellers, and what you need to know depending on your loan type.

What Are Seller Concessions?

In real estate, seller concessions are financial incentives or contributions a seller offers to the buyer to help complete the transaction. These concessions typically go toward covering some of the buyer’s closing costs or other upfront expenses, ultimately making the home more affordable for the buyer.

They’re especially helpful in:

• Buyer’s markets (where inventory is high and sellers need to stand out)
• Deals where the buyer needs extra financial help to close
• Homes needing repairs or upgrades

Example Scenario

Let’s say you’re selling your home for $400,000. The buyer asks for $10,000 in seller concessions to help cover closing costs. You, the seller, agree — contributing $10,000 at closing. That means the buyer brings $10,000 less in cash to the table, helping them afford the purchase more easily.

Common Types of Seller Concessions

There are several ways a seller can offer financial help. Here are the most common types:

1. Closing Cost Assistance

The seller helps pay a portion (or all) of the buyer’s closing costs, which might include:

• Title insurance
• Appraisal and inspection fees
• Attorney or escrow fees
• Loan origination charges

2. Repairs or Improvements

If issues show up during the home inspection, a seller may:

• Pay for repairs upfront
• Offer a credit at closing so the buyer can handle the repairs post-sale

3. Rate Buydowns

Sellers can pay to “buy down” the buyer’s mortgage rate, reducing their monthly payments — a valuable option in high-interest environments.

4. Paying for Points

Similar to a rate buydown, discount points are prepaid interest. The seller covers these points to lower the buyer’s rate.

5. HOA Fees or Prepaid Items

Sellers can help cover upfront costs like:

• Homeowners Association (HOA) fees
• Prepaid property taxes or insurance

Pros and Cons of Seller Concessions

For Sellers

    

      
✔ Pros
      
✖ Cons
 

      
Attracts more buyers, especially when the market is slow and can speed up the sales process
      
Reduces your net profit
    
 

      
Helps you stand out among competing listings
      
May signal to buyers that the home needs incentives to sell
    
  

For Buyers

    

      
✔ Pros
      
✖ Cons
 

      
Reduces out-of-pocket expenses
      
The seller might raise the price to offset concessions
    
 

      
Makes qualifying for a mortgage easier by lowering upfront costs
      
Can limit your negotiation power in other areas (like requesting repairs)
    
  

Limits Based on Loan Type

Before negotiating seller concessions in real estate, it’s important to know that loan programs have limits on how much a seller can contribute:

  

    

      
Loan Type
      
Max Seller Contribution
    
  
  

    

      
FHA Loan
      
Up to 6% of the loan amount
    
    

      
Conventional
      
3–9%, depending on the down payment
    
    

      
VA Loan
      
Up to 4% of the loan amount
    
  

Understanding these limits can help set clear expectations and prevent any financing issues during escrow.

Want to Learn More About Seller Concessions?

Whether you’re buying, selling, or simply preparing for your next move, knowing how to navigate seller concessions can help you move forward with confidence and clarity.

✨ Let’s talk strategy.

I’d love to walk you through how seller concessions could benefit your specific situation — and help you make empowered, strategic decisions in today’s market.