Why agents care
Concessions are a negotiation tool that can do more for a buyer than a price cut, especially as a rate buydown. Both sides need the numbers: buyers to see the payment effect, sellers to see the effect on their net.
Glossary term
Seller concessions
Seller concessions, also called seller credits or interested-party contributions, are amounts the seller agrees to pay toward the buyer's costs: closing costs, prepaids or discount points. Loan programs cap them as a percentage of the price, depending on the program and down payment.
Example
Example: instead of reducing the price by $8,000, a seller credits $8,000 toward a buyer's discount points, lowering the buyer's payment by more than the price cut would have.
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Questions by topic
Seller concessions: common questions
Are there limits on seller concessions?
Yes. FHA, VA, USDA and conventional programs each cap interested-party contributions. The buyer's lender confirms the limit.
Do concessions reduce the seller's net?
Yes, dollar for dollar, which is why they appear on a seller net sheet as a cost.
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