Seller's concession means the buyer borrows the closing cost from the bank with the mortgage. Suppose the price is agreed $300,000 (which is net to seller), now the buyer needs closing cost apporx 5% ($300,000 x5%= $15,000) the contract will be written for $315,000 and house has to appraise for $315,000.
Whenever there is a seller's concession the seller atty would advise to get the Pre-Appraisal done to make sure the appaise value of the house sooner.
The world has been doing buyer representation for eternity, and LI just caught up to it a couple of years ago.
I respectfully disagree with Ms. Bromm's reference to seller's concession which was prevalent before and very difficult to do in these financial times. I would be very surprised to see lenders today consider seller concessions.
Seller paying closing costs? A contract is an agreement between two people and if you and your seller agree on an arrangement whereby the seller says they will take care of closing costs, then you have a seller who is motivated to sell and understands the current market.
I wish more sellers would jump on board with this; it is common in most other states for sellers to pay closing costs.
I hope it works out for you.
It is not uncommon with new construction. The builder will sometimes pay the closing costs. There might be an occassion with a co-op unit to keep the price of the unit up for approval by the co-op board.
What is common is a "sellers concession". If a home is selling for $300K and the buyer needs $20K for closing costs, The seller will write up the contract for $320K with $20K to be returned to the buyer at the closing table for their closing costs. Then the adjustments are made by the attorneys to cover the higher transfer tax that the seller would have paid on the $320K price instead of the $300K price.
It usually makes more sense for the homeowner to sell at the lower price point, than a higher one with a credit.
Carol Bromm, SRES, CBR
Prudential Douglas Elliman, Babylon