Buyer Concessions Explained: When to Offer and How Much
Buyer concessions (also called seller concessions or seller assists) are closing cost credits the seller provides to the buyer. They can make or break a deal, but offering too much eats into your proceeds.
What Are Buyer Concessions?
A buyer concession is a credit from the seller toward the buyer's closing costs. Instead of the buyer paying $8,000 in closing costs out of pocket, the seller agrees to credit them $5,000 at closing. The sale price remains the same, but the seller's net proceeds decrease by the concession amount.
Average Concession
1.5-3%
of sale price is typical in balanced markets
When to Offer Concessions
- Buyer's market: Concessions can attract buyers in soft markets
- First-time buyers: Many first-time buyers are cash-strapped for closing costs
- VA and FHA buyers: These buyers often need help with closing costs
- Competing with new construction: Builders commonly offer concessions
- Home needs repairs: Concessions can offset known issues
How Much to Offer
Conventional loans cap seller concessions at 3-9% depending on the buyer's down payment. FHA loans cap at 6%. VA loans cap at 4% plus some additional items. Offering more than the loan allows will not help the buyer.
The Net Proceeds Impact
A $5,000 concession on a $400,000 sale reduces your net proceeds by exactly $5,000. However, the concession may attract more buyers or speed up the sale, which can offset the cost.
The Bottom Line
Concessions are a tool, not a giveaway. In the right situation, they help you close faster and at a better price. Use our concession calculator to model different scenarios.