What Are Seller Concession Offers?

By
Mortgage and Lending with The Federal Savings Bank

Seller's Concessions/Buyers Assist is where the seller agrees to pay part or all of the buyers closing costs. The seller must agree to the seller assist and it must be stated in the sales contract.

Most banks allow 3% seller concessions. Some lenders will limit the seller concession based on the amount financed. If you are taking a loan for more than 90% then the lender may only allow a 3% max seller concession. Under 90% they may allow 6%.

The seller assist is not a part of the loan and cannot be financed. The seller is lowering their gain from the sale to pay buyers closing costs and for that reason buyers seeking seller concessions are advised to ask for them in their 1st offer.

For example:

If a house is selling for $100,000 and the seller gives you a 6% seller concession the seller agrees to pay up to $6,000 in closing costs and recieve $94,000 at close. If buyers closing costs are less any money left over usually goes back to the seller as they cannot contribute toward buyer's down payment.

Sellers seeking to net a certain amount and offer buyers money towards closing as incentive should understand raising their asking price to include seller contributions risks bumping their head on the ceiling if it doesn't all fit within the appraised amount for the property's value.

www.GregZaccagni.com & www.MortgageAdvisor.info

 

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