Christina, the listing agent represents the Bank not you the buyer. What it appears is she is asking you to come in at full price and will then turn around and ask the bank for 3% back to cover some of your closing cost. If you were represented by a Buyers Agent you may have been able to purchase it for less along with a concession. The bottom line is - you may not have not required helped and could have used the money to reduce the price instead.
Not all banks will allow you to use their proceeds to close but it appears this one does.
Bottomline, you really don't have anyone protecting your interest.
As for Pre-approval. You can use any lender of your choice however I have heard in our office meeting today that if the bank is Countrywide they are offering an incentive for conventional loans (not sure about FHA or VA) meaning they will pay some money towards closing cost which is a good thing.
If you have any other questions you email me. (firstname.lastname@example.org)
Keller Williams Realty
To answer the question- Seller concessions is basically the seller paying for some of your costs. They take the proceeds from the sale, or their own money, and pay for things like mortgage closing costs, down payment, repairs etc. Putting a % on it won't fly for long with some banks, they need exact $ but its good in a first offer. You should be offering Market Value for the home, based on comps from the area. Don't go by what they are asking and certainly don't go by what a non-Realtor is telling, especially if they are working for the seller directly without Realtor code of ethics, and realtor laws to safeguard you, the buyer.
As for advice- Other then you need someone fighting on your side- I would have to say if you don't need the seller concessions in order to get the mortgage approved don't do it. If you have the cash for closing your mortgage then don't do the concessions. What happens when you do concessions is you are kind of putting up the money with your mortgage to give it to the seller so that they can give it back to you when they pay for your closing, or what ever you use your concessions for. So you will be paying interest on those concessions for 30 yrs, or for how ever long your mortgage is for. So again if you don't NEED them don't take them.