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What Are Seller Concessions? Understanding a Valuable Homebuying Tool

What Are Seller Concessions? Understanding a Valuable Homebuying Tool

When you’re in the market to purchase a new home, you’ll encounter a variety of terms and concepts related to the homebuying process. One such term that often arises is “seller concessions.” But what are seller concessions, and how can they benefit homebuyers and sellers? In this blog, we’ll demystify seller concessions and explore their role in the real estate transaction.

Seller Concessions Defined:

Seller concessions, also known as seller contributions or seller-paid closing costs, refer to an arrangement in which the seller agrees to cover some of the buyer’s closing costs during a real estate transaction. These costs typically include expenses associated with the closing process, such as title insurance, attorney fees, appraisal fees, and more.

Seller concessions are a financial arrangement designed to make homeownership more accessible for buyers by reducing the upfront costs associated with buying a home. While seller concessions are an essential tool for buyers, sellers can also benefit from their use in various ways.

How Seller Concessions Work:

Seller concessions are typically expressed as a percentage of the home’s purchase price or a specific dollar amount. For instance, a seller may agree to pay 3% of the purchase price towards the buyer’s closing costs, or they may offer a fixed amount, such as $5,000.

Here’s how seller concessions work in practice:

Scenario 1: Let’s say you’re purchasing a home for $300,000, and the seller agrees to provide 3% in seller concessions. In this case, the seller would contribute $9,000 towards your closing costs, reducing your out-of-pocket expenses.

Scenario 2: Alternatively, if you’re buying a house for $250,000, and the seller offers a fixed concession of $5,000, the seller would cover that specific amount of your closing costs.

Benefits of Seller Concessions:

Seller concessions offer numerous advantages for both buyers and sellers:

  1. Lower Upfront Costs for Buyers: Seller concessions reduce the financial burden on buyers during the homebuying process, making homeownership more accessible.

  2. Competitive Edge for Sellers: In a competitive market, offering concessions can make a property more attractive to potential buyers.

  3. Faster Closing: Seller concessions can expedite the closing process by helping buyers meet the financial requirements more efficiently.

  4. Negotiation Tool: Seller concessions provide an additional tool for negotiation during the offer stage, benefiting both parties.

Negotiating Seller Concessions:

Negotiating seller concessions is a common part of the real estate transaction process. When you’re making an offer on a home, you can specify the amount or percentage of seller concessions you’re seeking. Sellers can then decide whether they are willing to agree to those terms, negotiate, or decline the request.

It’s important to approach negotiations carefully, as there are limits on how much a seller can contribute, depending on the type of mortgage and the down payment. Your real estate agent can provide guidance on what’s reasonable and customary in your local market.


Seller concessions are a valuable tool in the world of real estate, offering benefits to both buyers and sellers. By reducing the financial burden on buyers and making properties more appealing to potential buyers, seller concessions play a pivotal role in facilitating smooth and efficient real estate transactions.

To explore how seller concessions can benefit you as a buyer or seller, or to gain more insights into the real estate market, contact AZ Mortgage. Our experienced team is here to assist you in navigating the intricacies of the homebuying process and making informed decisions.

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