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Understanding Seller Concessions

Seller concessions are tough to find in a hot real estate market but depending on the market in your area and the condition of the property you’re buying, you may still be able to secure seller concessions to save you money on your next real estate buy.

The U.S. real estate market is as hot as it’s been in over a decade, and unlike the housing bubble of the late aughts, this market appears to be far more stable and is poised to continue last year’s trends. Rising housing prices are being driven primarily by once-in-a-lifetime interest rates and inadequate building following the aforementioned bubble. That confluence of factors has created the mother of all sellers’ markets. While in most of the country it’s far more common to find buyers willing to offer concessions to secure the home of their dreams, it’s still possible to secure seller concessions if the local market or property condition warrants it.

Generally speaking, concessions are agreements between the buyer and seller to either waive certain steps in the transaction process or to cover costs of the other party. In the hottest real estate markets, it’s not uncommon to find buyers offering concessions such as waiving home inspections or accepting the property as-is (meaning buying the property without any improvements by the seller). If you’re currently shopping for property in those markets, you’re highly unlikely to receive seller concessions.


There are several easy indicators that can tell you whether asking for seller concessions is reasonable. If the real estate market you’re interested in frequently sees all-cash offers, bidding wars, or buyers purchasing properties sight unseen, then asking for any seller concessions is likely to be a non-starter and render any bid you make unattractive.

Those conditions are fairly prevalent in the U.S. housing market, however, it’s still possible to receive seller concessions if the property you’re pursuing is in need of costly renovation or if the local market is less attractive for other reasons, like employment opportunities, schools, or distance to airports/shopping/healthcare, etc.

What are Seller Concessions?

Seller concessions most often come in the form of seller-paid closing costs. It may not seem significant but closing costs can easily approach 5% of the total purchase price of the home. Real estate agents generally prefer seller concessions to a bid lower than the asking price because it doesn’t affect the agents’ commissions.

When a homeowner makes concessions they’re typically limited to 3-9% of the purchase price of the home, depending on the down payment and loan type (FHA loans limit seller concessions to 6% and VA loans limit it to 4%). If a homeowner is willing to make seller concessions it’s typically done to facilitate the sale or to assist a buyer that may be struggling to afford closing costs in addition to the down payment.

Types of Seller Concessions

Property taxes – A seller may be willing to pay property taxes for part of or the remainder of the year.

Origination fees – Much like how homebuilders will cover a portion of closing costs if you work with preferred lenders, a home seller may be willing to offer assistance with these fees.

Inspection, recording, or appraisal fees – These are all typical costs associated with housing transactions, and a motivated seller may be willing to foot the bill.

HOA fees – HOAs frequently have transfer or development fees which are typically low (relative to the purchase price) and can be split between the parties or paid entirely by the buyer or seller.

Asking for seller concessions is only a good idea if you’re looking at a property in a buyer’s market, but it can be a good way of saving on the purchase price of a home without asking the seller to drop their asking price.

Most of the country is experiencing a strong seller’s market, are you in one of those rare locations where buyers are in command?


Brad Simmerman is the Editor of Cabot Wealth Daily, the award-winning free daily advisory.