United Kingdom. Casey Bond, Rachel Witkowski. Contributor, Editor. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations. How Seller Concessions Work Seller concessions are certain costs associated with homebuying that the seller agrees to pay. Was this article helpful?
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Asking for seller concessions can increase your return on investment and allow you to utilize your available cash for other purposes, but there is always the risk of insulting the seller or losing the property to a more attractive offer. Before asking for a seller concession, it is important to understand the pros and cons of such a request. Make sure to ask your Realtor , if working with one, for their expert opinion as to whether asking for a seller concession is the right move in your local market, as they are not always suited for every rental property offer.
Both buyers and sellers pay closing costs in a real estate closing. This can equate to the buyer having to pay several thousand dollars more at closing on top of the down payment. Buyers can request seller concessions to help reduce the amount of cash needed at closing. A common method of reducing closing costs with seller concessions is by the buyer offering a higher amount than the list price with a seller concession.
Seller concessions are more common in a buyer's market than a seller's market and are especially common with first-time home buyers. Although a buyer can request a seller concession at any time. Typical scenarios when it makes sense to ask for a seller concession are when:. While it may seem silly not to ask for a seller concession when buying a home, it's important to remember that asking for a seller concession may result in a declined offer or losing the home to a more competitive offer, especially if it's a seller's market, because it's going to require the seller to pay more or earn less from the sale.
If you feel you are in a situation where requesting a seller concession makes sense, you can ask for the concession at one of these two times:. If seller concessions are requested as a part of renegotiations, make sure they are requested before the inspection period expires so as not to risk the escrow deposit in the event the seller declines.
If you do ask for a concession, try to make the offer more appealing to incentivize the seller to say yes. Seller concessions are fairly common, and in a strong buyer's market, it doesn't hurt to ask. If you are using a real estate agent , ask for their expert opinion on whether asking for a seller concession is right for your situation.
Most often, your agent will advise you on what they feel is best given the current market and their knowledge of the seller's motivation to sell. Our team of analysts agrees.
These 10 real estate plays are the best ways to invest in real estate right now. Find out how you can get started with Real Estate Winners by clicking here. Liz Brumer-Smith is a real estate investor and Millionacres contributor. Advertiser Disclosure We do receive compensation from some affiliate partners whose offers appear here.
Millionacres Logo. Tax Deductions Depreciation Capital Gains. New York City Denver Philadelphia. Local Real Estate News. Research Real Estate Glossary. A seller concession is a gift that a seller can offer a potential buyer to reduce the cost of buying a home. The money from the seller can then be put toward closing costs or homeowners association fees.
Or, if a homebuyer discovers that something is broken or not up to code during the inspection , the seller can agree to cover the cost of that repair. In some cases, a seller can offer a future homeowner access to a special deal like an all-expense paid vacation. Whatever it is, seller concessions can significantly lower the amount future homeowners have to pay out of pocket. In fact, a seller concession can be beneficial to both buyers and sellers. The buyer owes less money overall and might qualify for a tax deduction.
There are rules, however, that set limits on the maximum amount that a seller can hand over.
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