Key takeaways:
- Concessions can help attract buyers without requiring a major price cut.
- Financial concessions, such as closing cost assistance or mortgage rate buydowns, can reduce a buyer’s upfront costs.
- According to Redfin data, seller concessions were offered in 46.2% of U.S. home sales this spring, near a record high.
Selling a home often involves negotiation. One tool that can help you attract buyers, smooth out deal hiccups, and close faster without slashing your listing price is the seller concession.
In today’s market, concessions have become an increasingly important tool for sellers. According to Redfin data, sellers offered concessions in 46.2% of U.S. home sales this spring, one of the highest shares on record. With 48.5% more sellers than buyers nationwide, many homeowners are using concessions to make their listings more competitive. In fact, 15.7% of home sales now include both a concession and a price reduction, showing that sellers are often combining multiple strategies to attract buyers.
Whether you’re selling a home in Seattle, WA, or a house in Austin, TX, this Redfin article will walk you through concrete seller concession examples, how they work, and when they may make sense in today’s market.
Common examples at a glance
Before diving deeper, here are some of the most common seller concessions used in today’s housing market:
- Closing cost assistance: Covering upfront fees like escrow, title insurance, or lender loan origination charges.
- Repair or upgrade credits: Offering a dollar amount at closing for issues flagged during a home inspection instead of managing the repairs yourself.
- Mortgage rate buydowns: Contributing toward a buyer’s interest rate buydown to lower their monthly mortgage payments.
- Perks and extras: Including appliances, home warranties, flexible move-out timelines, etc. .
What are seller concessions? (Credits vs. non-credits)
A seller concession is anything a seller offers to help reduce a buyer’s costs or make a home purchase more appealing. Concessions can take several forms, from helping cover closing costs to offering a mortgage rate buydown or including valuable personal property in the sale.
For buyers, concessions can lower upfront expenses and make a home purchase more affordable. For sellers, they’re often a way to attract buyers, strengthen an offer, or keep a deal moving forward without making a significant price cut.
8 essential seller concession examples
Seller concessions can take many forms, from helping with upfront costs to addressing concerns that might otherwise derail a sale. Here are some of the most common examples sellers use to attract buyers and keep deals moving forward.
1. Closing cost assistance
The seller agrees to cover a portion of the buyer’s upfront fees, such as lender origination fees, title insurance, or escrow charges.
- Example: a seller offers a $5,000 credit toward the buyer’s closing costs.
- Why it works: Reduces the amount of cash the buyer needs to bring to closing..
2. Repair or upgrade credits
Instead of hiring a contractor to fix an issue discovered during the home inspection, the seller gives the buyer a lump-sum credit at closing so the buyer can handle the repair themselves later.
- Example: Following a home inspection, the seller offers a $4,000 credit to address an aging HVAC system.
- Why it works: Saves the seller time and prevents the deal from falling out of contract due to construction delays.
3. Mortgage interest rate buydowns
The seller pays an upfront fee to the buyer’s lender to reduce the buyer’s mortgage interest rate. This is often structured as a temporary buydown that lowers monthly payments during the first few years of the loan.
- Example: A seller contributes $8,000 toward a temporary rate buydown, reducing the buyer’s monthly payment in the early years of the mortgage.
- Why it works: Directly targets affordability concerns without requiring the seller to lower the home’s sale price.
4. HOA-related credits
If the home is part of a Homeowners Association (HOA) that has an upcoming special assessment or high monthly dues, the seller pre-pays a set number of months or years via a credit at closing.
- Local Example: A condo seller offers to cover the first full year of HOA dues ($450/month) as a $5,400 credit.
- Why it works: Can make a property with high HOA costs feel more affordable upfront.
5. Personal property inclusions
While not a traditional seller concession, sellers sometimes include personal property to make a home more attractive to buyers.
- Examples: Appliances, patio furniture, lawn equipment, etc. .
- Why it works: Can add value for buyers without requiring the seller to reduce the sale price.
6. Home warranties
The seller purchases a home warranty policy for a set period of time on behalf of the buyer to protect against major appliance or system breakdowns after closing.
- Example: A one-year home warranty covering major systems and built-in appliances, usually costing between $500 and $800.
- Why it works: Provides peace of mind, especially for first-time buyers.
7. 7. Flexible closing timelines
The buyer and seller agree to a closing or move-out timeline that better fits one party’s needs. In some cases, the buyer allows the seller to remain in the home for a short period after closing through a lease-back agreement.
- Example: A buyer whose lease ends in 60 days negotiates a later closing date so they can avoid paying overlapping housing costs.
- Why it works: Helps both parties navigate timing challenges while keeping the deal moving forward and without changing the purchase price..
8. Seller-paid repairs before closing
The seller completes agreed-upon repairs before closing rather than offering a credit.
- Example: After an inspection reveals a damaged handrail and roof issue, the seller hires licensed contractors to make the repairs before closing.
- Why it works: Addresses buyer concerns upfront and is sometimes required for certain government-backed loans (like FHA or VA loans) where safety hazards (like peeling lead paint or broken handrails) must be fixed prior to loan funding.
How to use seller concessions strategically
In today’s market, concessions aren’t necessarily a sign that something is wrong with a home. They’re increasingly being used as a pricing and marketing strategy to attract buyers while preserving the home’s asking price.
To make them work for you, keep these rules in mind:
- Price with concessions in mind: If your local market is highly competitive, review recent comparable sales (comps) to see what percentage of sellers are offering incentives. Build that cushion into your initial listing price.
- Don’t lead with concessions: Let your home’s value speak first. Keep concessions in your back pocket as a powerful counter-offer tool during inspection or financing hiccups.
- Know your loan limits: Lenders place strict caps on how much a seller can contribute financially based on the loan type and down payment amount. For example, conventional loans typically cap seller concessions between 3% and 9% of the purchase price. Always check these limits before finalizing your counter-offer.
The bottom line on concession examples
Seller concessions have become a common tool in today’s housing market. Whether you’re helping a buyer with closing costs, offering a mortgage rate buydown, or covering repairs, the right concession can make your home more attractive without requiring a major price reduction.
With nearly half of home sales now including some type of concession, sellers should view them as one of several strategies available to attract buyers, keep negotiations moving, and successfully close a sale.
Seller concessions FAQs
1. Do seller concessions affect a home’s appraisal value?
Seller concessions don’t directly alter appraised value. However, unusually high concessions may lead lenders to question if the price reflects market value, potentially impacting loan approval.
2. Can I repair issues myself instead of offering a concession?
Yes, but it depends on your priorities. Repairs give you cost control and appeal to buyers seeking move-in readiness but concessions save time and stress, offering buyers flexibility. If you need a quick sale, concessions are easier. If buyer confidence is key, completing repairs upfront can be more attractive.
3. Can offering seller concessions make buyers suspicious?
Sellers should frame concessions as added value, such as helping with closing costs so buyers have more cash for updates, rather than offering unusually generous concessions that might make buyers suspect hidden issues with the home.
4. Are seller concessions more common in certain housing markets?
Yes, seller concessions are more common in slower or high-cost real estate markets. This is due to buyers having greater negotiating power or facing higher initial expenses. Conversely, in competitive hot markets with numerous offers, sellers are less inclined to offer concessions as strong buyer interest already exists.
5. Do seller concessions have tax implications for home sellers?
Seller concessions generally reduce the amount you take home from the sale, but how they’re treated for tax purposes can vary. For example, a $400,000 sale with $10,000 in concessions may leave you with $390,000 in net proceeds. Tax rules can be complex, so it’s important to confirm your specific situation with a qualified tax professional.
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