Seller concessions are financial contributions a home seller gives to a buyer. They’re a type of negotiation tool and are called concessions because the seller is usually “conceding,” or giving up something.
They are most often requested by buyers rather than offered upfront by sellers. While the concept of seller concessions is easy — it’s just something a seller gives a buyer — there’s still a lot to understand.
For example: Most of the time, seller concessions can’t exceed 6% of the home’s sale price. Additionally, seller concessions can affect buyers’ loans in different ways.
There are also risks associated with seller concessions. Sometimes they can cause major hiccups with a buyer’s lender.
We strongly recommend working with an experienced real estate agent who can help you understand exactly when and how to use seller concessions — and how not to. Just answer a few quick questions and we’ll help you find the best real estate agents in your area.
What is a seller concession?
A seller concession — also called a seller assist in some regions — is simply something a home seller gives to a buyer. It’s a financial contribution used to cover some of the expenses tied to the transaction, sometimes including closing costs or down payment contributions.
But the concept can be tricky because there are many reasons why seller concessions may come into play, and there are also several rules associated with them. Plus, these rules sometimes change depending on the type of loan involved.
For a handy resource, we recommend the National Association of Realtors’ consumer guide to seller concessions.
What do seller concessions do?
For buyers, seller concessions usually reduce the cash they bring to closing.
Seller concessions can provide buyers with cash to make necessary repairs they may not otherwise be able to afford, and they can even offset certain costs, enabling buyers to make a higher, more attractive offer.
For sellers, concessions can help get a home sold faster and ensure that transactions don’t fall through because the buyer can’t afford the full amount required at closing, or because they don’t have all the cash on hand to make lender-required repairs.
They can also save sellers time: Rather than making repairs in order to sell a house, for example, they can use seller concessions to provide a buyer with funds to make those repairs themselves after the transaction is complete.
How do seller concessions work?
The seller gives the buyer a credit (money) at closing, which the title company or attorneys will then disburse. The money comes from the home seller’s proceeds, or profits.
For example: If a seller makes $50,000 profit from the sale of their house, and the buyer requested $5,000 in concessions, the seller would give $5,000 of their proceeds to the buyer and then walk away with $45,000.
Here’s how it works in practice.
Step 1: The buyer requests a concession
Typically, buyers will request a concession when they make an offer, but sometimes concessions can be requested after the home inspection if the inspector uncovers a costly but necessary repair.
Rules about when and how a buyer can request concessions will vary by lender and state.
Alternatively, while uncommon, a seller might offer concessions upfront in order to make their listing more attractive. The wording in the listing might look like this: “Seller offering closing cost assistance with full-price offer,” or “Seller willing to contribute up to $5,000 toward buyer’s closing costs.”
Step 2: Concession terms are written or added into the purchase agreement
If the seller agrees to the concession, it becomes part of the purchase agreement. Terms will include the exact dollar amount and what the concession is meant to cover (such as closing costs or repairs).
Most of the time, the concessions are written into the original offer (the purchase agreement).
Addendums and amendments are used when concessions are added after a purchase agreement has already been signed. This is most common when inspections reveal repairs.
An addendum is literally an “add on” to the purchase agreement, whereas an amendment changes a purchase agreement.
For example, if the inspection finds that the house needs a new roof, then the seller concession could involve either a seller credit at closing for the cost of the roof (an addendum) or lowering the purchase price of the home to accommodate the cost of the roof (an amendment).
The state, the lender, and the type of concession determine whether to use an addendum or an amendment; an experienced real estate agent will know which one to use.
Step 3: At closing, the concession is applied as a seller credit
A seller credit means that instead of the buyer bringing additional money to closing, the funds get subtracted from the seller’s profits and credited to the buyer. Seller credits cannot be applied to the buyer’s down payment or the cost of the home.
Seller concessions help make the deal work by shifting some of the buyer’s costs to the seller, but only if it’s allowed by the lender, agreed to in writing, and handled correctly at closing.
How do you get seller concessions?
There are a few possible ways for a buyer to get seller concessions.
The buyer asks for a concession in the initial offer
The request is usually written into the purchase agreement via a seller concessions clause: “Seller to contribute $X towards buyer’s closing costs.”
The buyer asks for a concession after inspections
In these cases, a buyer’s agent will typically create an addendum to the purchase agreement requesting concessions: “Seller to contribute $3,000 towards new HVAC system.”
The seller offers the concession in the listing
“Seller to provide $5,000 toward new roof with full-priced offer” is an example of a concession in a listing. These are not common, though.
How to improve chances of getting seller concessions
It’s important to remember that sellers are not obligated to give a buyer concessions.
Additionally — especially in highly competitive markets — asking for concessions could get an offer rejected in favor of another offer where the buyer is not asking for any financial support.
Some ways to improve chances of getting a concession include:
Know the market
In a slower buyer-friendly market, sellers may be more open to providing concessions if it means they can get their home sold quickly.
On the flip side, in a seller’s market, buyers are competing with a lot of other buyers, and concessions are less likely.
Make an all-around great offer
When asking for concessions, it’s best to offer full price, though offering above asking can improve the chances of getting the concession.
Providing the seller with a lender’s pre-approval letter, offering to close quickly, or waiving inspections could make an offer attractive even with requests for concessions.
Work with an experienced buyer’s agent
They’ll help frame the request in a way that won’t turn the seller off. They’ll also make sure the concessions fit in with the lender’s requirements, and they can negotiate with the seller’s agent on your behalf.
Are there any risks with seller concessions?
Yes, but they can usually be mitigated or avoided.
Risk 1: Offer rejections, or transactions that fall through
Asking for seller concessions can make a buyer’s offer less competitive, especially in a fast-paced market. Sellers are more likely to get (and accept) a full-price offer from someone not requesting any concessions.
Additionally, asking for seller concessions later in the transaction can lead to negotiation-related hiccups. The seller may reject the request, in which case the buyer must decide whether they can move forward without the concession or whether they should withdraw their offer and possibly lose any earnest money they’ve contributed.
Risk 2: Appraisal issues
In cases where seller concessions are going to be rolled into a buyer’s mortgage, sometimes this causes the home to appraise for less than it’s selling for, forcing the buyer to spend more out-of-pocket or the seller to reduce the price of the home.
Here are a few things to understand about seller concessions and appraisals.
Loan-to-Value (LTV)
LTV stands for loan-to-value, and it’s the ratio (difference) between how much a home is worth and how much the lender is willing to loan you.
With a few exceptions (like USDA loans, VA loans, and special government or credit union programs) a bank almost never loans 100% of the price of a home, which is the point of a down payment: It fills in what the bank won’t pay.
This matters because sometimes (but not always), seller concessions are rolled into a home’s purchase price. When this happens, the loan amount might increase, but your LTV typically does not change.
That means the buyer might need to put down more money upfront in order to keep the same loan.
For example: Let’s say a loan has a 95% LTV, and the home is priced at $100,000. The bank agrees to loan $95,000, and the buyer is responsible for the other 5% (a $5,000 down payment).
The inspection uncovers a $3,000 repair. The buyer’s agent renegotiates and amends the purchase agreement so that the price of the home is now $103,000, and the seller will give $3,000 in concessions back at closing.
The seller is fine with this, since they aren’t technically losing anything and are still getting their expected profits.
The bank still covers 95% of the new $103,000 price, which is $97,850. But now the down payment is 5% of $103,000, or $5,150.
So the buyer needs to bring $150 more to closing than originally planned.
If seller concessions result in an increase in the price of the home, the buyer should also expect to bring more cash to the table for the down payment.
Appraisals
While the home price can be negotiated between the buyer and seller, only an appraiser can determine the value of the home.
Appraisers have standardized measures for determining a home’s value. Banks don’t want to lend more money than a home is worth, which is why appraisals are required for mortgage loans. It’s also why buyers who offer more than a home is worth in order to get seller concessions might get stuck mid-transaction if the appraisal comes in below the offer price.
When that happens, buyers usually end up needing to bring quite a bit more to the table in order to close, which can defeat the purpose of the seller concession.
What costs can a seller concession cover?
A seller concession can cover a buyer’s closing costs, home repairs, and home warranties.
With extremely rare exceptions (dictated by state laws or banks’ rules), seller concessions cannot cover:
- Any portion of a buyer’s down payment
- Any portion of the sales cost of the home itself
- Extra cash for the buyer
- Real estate agent commissions
Sometimes seller concessions may be used for minor cosmetic updates, such as carpet replacement or painting, but this is rare and only allowed when the lender agrees that the work is necessary for the home to meet basic livability standards.
Some of the most common things seller concessions are used for are:
- Mortgage or “discount” points: Money paid to the lender that helps lower a buyer’s interest rate
- Settlement fees: Paid to a closing or title company that manages the paperwork, legal or county filings, and bank wiring or financial disbursements
- Title insurance: Protects buyers or the lender in the event of an ownership-related snag
- Appraisal fees: Sometimes this fee is paid upfront at the time of appraisal, though it can be rolled into closing costs
- Prepaid property taxes: Property taxes the seller has paid for the year and the buyer must reimburse
- Homeowners insurance: Buyers often have to pay for coverage at closing so the home is protected from day one
- Home warranties: These cover the buyer for a short period of time in the event of a major home system failure
- Lender-required repairs: Most lenders — especially those who offer government-backed loans — won’t lend on a home with issues
» MORE: Who Pays Closing Costs?
Seller concessions can also sometimes cover other things that are usually paid for by the buyer, such as certain services:
- Home inspection fees: Inspections are usually covered by the buyer at the time of inspection, but in the case of a seller concession, the inspector would invoice the title agency, and that invoice would be paid at closing.
- Pest inspections, water tests, and mold tests: Some lenders require pest inspections and water or mold tests.
- Surveys. It’s uncommon to need a survey when buying a home, but it can be a good idea if you’re walking into a situation where property lines are debated.
Maximum seller concessions by loan type (2025)
The amount a seller can contribute is limited based on the buyer’s loan type and, for some loans, the down payment amount. The federal government sets some of these limits (like for FHA or VA loans), but individual banks also have some control, especially for conventional loans.
These caps are for either the purchase price of the home or the appraised value of the home — whichever is lower.
A seller concessions calculator, seller closing cost calculator, or lender and real estate agent can help determine exactly how providing a seller assist will affect net proceeds.
Here are the current maximum concession limits for each loan type, mandated by the federal government or managed by banks:
| Loan Type | Down Payment | Maximum Seller Concession |
|---|---|---|
| Conventional (primary) | Less than 10% | 3% of purchase/appraised value (whichever is lower) |
| 10–24.99% | 6% | |
| 25% or more | 9% | |
| Conventional (investment — a home you will be renting out, and not living in) | Any amount | 2% |
| FHA | Any amount | 6% |
| VA | Any amount | 4% (plus all closing costs)* |
| USDA | Any amount | 6% |
| *With VA loans, sellers can pay for: 1. All the buyer’s “customary” closing costs and 2. Up to 4% of the home’s price (or appraised value, whichever is less) in additional concessions | ||
Can seller concessions exceed closing costs?
No — per state and federal laws and the rules of many lenders, seller concessions cannot exceed closing cost amounts.
In other words, if the lender determines your closing costs are $7,000, the seller can’t give you $10,000 in concessions, even if that amount falls below your concessions “cap.”
Pros and cons of seller concessions
On the surface, seller concessions seem like a win for a buyer and a loss for a seller, but that’s not always the case.
Pros of seller concessions for the buyer
- Lower upfront costs
- Concessions can be rolled into the mortgage
Cons of seller concessions for the buyer
- Potential rejected offers
- Appraisal issues
Pros of seller concessions for the seller
- Speedy sale
- Save money on repairs
- Higher earnings (sometimes)
Cons of seller concessions for the seller
- Fewer profits
- Perception of property issues (if advertised in listing)
When should a seller refuse concessions?
The main reasons a seller should refuse concessions are when the concessions would cut too far into their profits, or when they just don’t need them because the market is too hot.
When a buyer requests seller concessions, sellers should always crunch the numbers first before simply agreeing to them just to sell their house.
The biggest reason a seller might refuse concessions, however, is that the market is hot, and they have better offers they can accept.
Finally, a seller might decline concessions if the home appraises low. If a seller is already offering concessions and then has to lower the price of the home as well, that’s a double hit to their profits.
When would a seller agree to concessions?
Agreeing to a seller concession isn’t necessarily a bad thing for home sellers.
Sellers consider a variety of factors when evaluating an offer, like contingencies, closing timelines, financing strength, and how smoothly the deal might close. In some cases, the strongest overall offer may include a request for seller concessions.
Other times, a seller may offer concessions outright as a way to keep a deal alive. This is especially true in cases where the home has been on the market for a while, the inspection turned up issues the seller doesn’t want to fix, or the seller simply needs to move quickly.
Ultimately, concessions are just one more tool sellers can use to help close the sale on terms that still work for them.
» LEARN: How do home sellers evaluate an offer?
Seller concessions vs. a price reduction
If you’re selling your home and concessions come into play, there may be points where you’ll be deciding whether to go forward with the concessions or simply lower the price of your home.
Here’s what the different options look like.
Price reduction
If your buyer is asking for concessions but you aren’t sure you want to provide them, it could make sense to lower the price of the home instead.
The point of seller concessions is for the buyer to have more cash at closing — lowering the price of the home will likely lower the amount of cash they need to bring to closing, but that’s mostly going to affect the down payment.
In most other ways, lowering the price of a home won’t help a buyer who needs concessions because many closing fees and repairs are going to stay the same regardless of the price of the home.
Lowering the price can also be helpful if the appraisal came in below the selling price of the home. Someone is going to be stuck making up the difference between that appraised value and the final price. Buyers usually can’t make up this difference because they don’t have the cash on hand.
In those cases, lowering the price can be a good idea to make sure the deal closes.
Seller concessions
If lowering the price doesn’t make sense for your particular situation, or if the appraised value of the home is at or above the selling price, then seller concessions would be the way to go.
If you don’t want to provide them, and your market is hot enough that you and your real estate agent feel confident a better offer will come along, you can say no.
But if you determine that you can afford to concede the funds the buyer is asking for, then providing those concessions can keep your deal moving and get you to the closing table.
Buyers: Is it better to ask for seller concessions or a lower sales price?
If you’re buying a home, it’s better to ask for seller concessions if you don’t have enough cash on hand to close or for lender-required repairs.
On the other hand, it’s better to ask for a price reduction if your main concerns are your down payment and monthly payment.
Conclusion
Seller concessions are a negotiation tool that can be incredibly useful for both buyers and sellers. However, they’re so much more than just a seller giving a buyer some cash to help them close. A lot of thought should go into determining how seller concessions could impact a deal.
Experienced agents know how to navigate seller concessions and understand your local market. Whether you're buying or selling, Clever can find you a top agent who’ll guide you through the process and help you feel confident at every step. Just answer a few quick questions and we’ll send you a list of top agents in your neighborhood.
FAQ
Are seller concessions taxed?
Seller concessions are not typically taxed as income for the seller or the buyer. They are considered part of the transaction and are reflected in the closing documents.
Do seller concessions affect the home's sale price?
They can, but only if the sales price of the home is increased in order to accommodate the concessions.
However, this is most common in hotter markets where buyers who need concessions will need to make especially competitive offers. In slower markets, sellers will usually “concede” some of their expected profits in order to get a deal to close.
How do buyers request seller concessions during negotiations?
If concessions were not requested in the offer, requests for concessions may come up during negotiations when something unexpected is discovered, such as a lender-required repair or an update to the final closing costs. Once a plan is agreed upon, an agent will usually update the purchase agreement with an addendum, notating the concessions and the purpose for them, with everyone signing off.
Can seller concessions delay closing?
Most commonly, concessions can delay closing if there are issues with documentation, appraisal, or just difficulty negotiating between buyer and seller how to make the concessions work.