Home Buying in 10940>Question Details

Ridpc, Other/Just Looking in Orange County, NY

What is a seller's concession and does it benefit a seller?

Asked by Ridpc, Orange County, NY Sun Nov 30, 2008

Help the community by answering this question:

Answers

6
A good question for someone not familiar with real estate terms. Briefly, it is an agreement between buyer and seller to give a credit toward something regarding a house.

It benefits a seller in that it MAY help sell the house. Example-- you have your downpayment money but lack closing money. IF the house will appraise high enough the seller consents to include the amount needed (usually up to 6% of selling price) in the selling price thus giving you the needed funds by "paying " them for you. You still wind up paying for them indirectly in the price of the house.

Aside from closing costs a seller can give you a "concession" to replace/repair things that they can otherwise deal with if the house does not sell. Example--carpeting/flooring, a septic upgrade, appliances. It is an incentive to get you to buy it knowing you will get funds to do it on your own.
1 vote Thank Flag Link Sun Dec 7, 2008
I guess NY differs from other places.

A seller's concession benefits the seller because it assists the buyer in the purchase when they do not have the funds for closing costs.

Let's say the house is selling for $100k. The buyer will typically need 4-5% for closing costs in NY. So, he buys the house from you for $140k, but you pay the $40k in closing costs. Tax wise, it is a wash. You sold for $40 higher and paid closing costs of $40 which is 100% tax deductible.

Caveat: The house must appraise for the additional amount and the buyer must have great credit!
Web Reference: http://GailGladstone.com
1 vote Thank Flag Link Sun Nov 30, 2008
You mean $4,000, right? 4% of $100,000, is $4,000. Let's not confuse the readers (and have them think us NY'ers can't do math! lol)
Flag Sun May 4, 2014
There is no benefit to the seller they only ASSIST you with your closing costs. Lenders in most instances have "cap rate" for what a seller can contribute. Work with your buyers agent regarding the contract and seller contribution.
Web Reference: http://www.lynn911.com
1 vote Thank Flag Link Sun Nov 30, 2008
If you are seeing this in listings, it is usually that a seller is offering to pay part of your closing costs to try to get you to buy their home.
1 vote Thank Flag Link Sun Nov 30, 2008
It is basically saying, "ok, I am willing to do this for that," it is usually something like taking less money in order to get the deal done. Perhaps, it could be you'll have something fixed at your cost. You are conceeding something in order to get the deal done.
Web Reference: http://www.shoookie.com
1 vote Thank Flag Link Sun Nov 30, 2008
Many time a potential buyer does not have the funds for a downpayment and the closing costs. The seller will give money back to the buyer at the closing to cover these costs.

In most cases, the seller is mainly concerned with what they are netting..meaning how much money they are actually walking away with. A Seller's Concession is a tool to help a potential buyer qualify to purchase. Assuming the home appraises out there is very little impact on the seller
Web Reference: http://www.RemoRealty.com
0 votes Thank Flag Link Fri Jan 2, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer