What Are Seller Concessions in Real Estate?

📖 What Are Seller Concessions?

Seller concessions are costs that a home seller agrees to pay on behalf of the buyer to help close the deal. Instead of lowering the listing price, concessions reduce the buyer’s out-of-pocket expenses at closing — making the home more affordable and attractive.

Concessions are common in negotiations and often come up when buyers face high closing costs or limited cash reserves.

💡 Common Types of Seller Concessions

• Closing costs: Loan origination fees, appraisal, title insurance, and recording fees.
• Prepaid expenses: Property taxes, HOA dues, or homeowner’s insurance premiums.
• Repair credits: Allowances for repairs instead of completing them before closing.
• Mortgage points: Paying discount points to reduce the buyer’s interest rate.

🏦 Loan Limits on Seller Concessions

Lenders cap how much a seller can contribute toward concessions. Typical limits include:

• FHA loans: Up to 6% of the purchase price.
• VA loans: Usually capped at 4%.
• Conventional loans: Ranges between 3%–9%, depending on down payment.

⚖️ Pros and Cons of Seller Concessions

Pros: Attracts buyers, helps with financing, and can speed up the sale.

Cons: Reduces your net proceeds and may encourage buyers to ask for more concessions.

📉 Seller Concessions vs Price Reduction

A price reduction lowers the home’s value for everyone, while concessions specifically help one buyer cover their costs. In many cases, offering $5,000 in concessions is more effective than reducing the list price by $5,000.

📝 Tips for FSBO Sellers

• Calculate how concessions affect your net proceeds.
• Stay within lender concession limits to avoid contract issues.
• Use concessions strategically — they can help seal the deal without dropping your asking price.

Looking for broader strategies beyond concessions? Check out our best home selling tips to learn how pricing, staging, and MLS exposure help FSBO sellers attract more buyers.