Seller concessions are contributions the seller makes toward your closing costs. The right strategy depends on market conditions and your specific needs.
Maximum concessions: FHA up to 6% of purchase price, Conventional up to 3-9% (varies by down payment), VA up to 4%, USDA up to 6%.
In a buyer's market, request the maximum. In a competitive market, request less or waive concessions to make your offer stronger.
How Much to Request
Calculate your true closing costs first. Request concessions equal to your estimated costs. Don't over-request, as the seller may view it negatively. A well-priced request shows you've done your homework.
Maximums by Loan Type
FHA: up to 6%, VA: up to 4%, USDA: up to 6%, Conventional (10%+ down): up to 6%, Conventional (25%+ down): up to 9%, Conventional (under 10% down): up to 3%
Market-Based Strategy
Market conditions drive strategy. Buyer's market (inventory high): request maximum concessions. Seller's market (inventory low): request minimal concessions or none. Balanced market: request a reasonable amount.
Price vs Concession
You can structure the offer as a higher purchase price with more concessions, or a lower price with fewer concessions. A higher price with concessions may help the seller net more while covering your costs.
Negotiation Tactics
Ask your agent about typical concessions in your market. Have your loan officer calculate your exact closing costs so you know how much to request. Be ready to justify your request with the closing cost estimate.
Real Example
On a 00K home with FHA financing: closing costs are K (3%). Request 3% (K) in concessions. The seller reduces your closing costs by K. Your cash to close drops by K.