Quick Answer
Rather than lowering the price, a seller can agree to cover some of your closing costs directly, which is often called a concession. It's negotiated into the purchase agreement and can help a buyer bring less cash to closing, though lenders cap how much a seller can contribute based on your loan type and down payment.
- What they cover
- Closing costs and prepaid items, not the price itself
- Who benefits
- Buyers, by reducing cash needed at closing
- Lender limits
- Capped by loan type and down payment percentage
- Negotiated in
- The purchase agreement or a later counteroffer
How Seller Concessions Work
A buyer can ask for concessions in their initial offer or negotiate them in later rounds, often as a trade-off for accepting the seller's asking price rather than negotiating it down directly.
Concessions typically go toward closing costs, prepaid taxes and insurance, or a home warranty, not toward the buyer's down payment itself.
Why Sellers Agree to Them
Sellers sometimes prefer to hold their headline price steady while offering concessions instead, especially if a lower sale price could affect neighborhood comps for future sales.
Loan programs, especially FHA and VA loans, set specific limits on how much a seller can contribute, so your lender needs to confirm the concession amount fits within those guidelines.
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Frequently Asked Questions — Seller concessions
Do seller concessions lower my loan amount?
No, they cover costs at closing rather than reducing the purchase price your loan is based on.
Is there a limit to how much a seller can contribute?
Yes, lenders cap concessions as a percentage of the purchase price, and the cap varies by loan type and down payment.
Can concessions be used for a down payment?
Generally no, seller concessions are meant for closing costs and prepaids, not the buyer's own down payment.
Are seller concessions common in Central Indiana?
They come and go with market conditions; buyers are more likely to see them offered when homes are taking longer to sell.