The Most Useful Negotiation Tool Most Buyers Never Ask About
When homes are averaging well over 80 days on market, the question stops being only “what price?” and becomes “what else can the seller give?” Seller concessions are that second lever, and used well, they can be worth more to a buyer than a price cut.
Here’s what they are, what they can pay for, and how to ask.
What a Seller Concession Is
A seller concession is money the seller agrees to put toward your costs at closing instead of, or in addition to, lowering the price. The contract price stays where it is, and a credit appears on your closing disclosure. The TREC contract includes a place to state the seller’s contribution toward your expenses.
What Concessions Can Pay For
Concessions generally go toward costs of buying, not the down payment itself. That includes lender fees and other closing costs, prepaid items such as insurance and escrow funding, discount points to buy down your rate, a temporary buydown such as a 2-1, and in some cases specific repairs or inspection items.
Because rates have climbed back above 7 percent, buydowns are the most common use right now. Our post on rate buydowns versus price reductions walks through how to decide.
The Limits Your Loan Sets
Lenders cap how much a seller can contribute, and the cap depends on your loan type and down payment. As general guidelines:
Conventional loans: about 3 percent of the price with less than 10 percent down, 6 percent with 10 to 25 percent down, and 9 percent with more than 25 percent down.
FHA loans: up to 6 percent.
VA loans: up to 4 percent for concessions, with certain closing costs treated separately.
A concession also can’t exceed your actual eligible costs, so you can’t ask for more than the closing costs and prepaids you’d really pay. On a $450,000 home with 10 percent down, a 6 percent cap is $27,000, but your real costs may be well under that. Your lender confirms the exact ceiling.
How Much Is Realistic Right Now?
There’s no fixed number, and I’d be wary of anyone who promises one. What you can realistically ask for depends on four things.
Days on market. A listing in its first three weeks has little reason to give. One that has passed 45 or 60 days has a motivated seller. With Austin homes averaging 80 to 90 days in recent reports, many sellers are already expecting the request.
Price relative to comparable sales. A home priced at or below comps has less room than one priced above them.
The seller’s situation. A seller who has already bought elsewhere, is relocating, or is selling an estate usually has more reason to deal.
The strength of the rest of your offer. A clean offer with a solid pre-approval and reasonable timeline can ask for more than a shaky one.
Concession or Price Cut?
Sellers often prefer concessions, because the sale price stays higher and protects comparable sales for the neighborhood. A seller who won’t move on price may still agree to a credit. For the seller, a concession costs slightly more than an equivalent price cut, since a lower price would also reduce the commission. Knowing that helps you gauge how firmly to ask.
One warning: never agree to raise the price to “offset” a concession. Lenders and appraisers treat that as an inflated price, and it can sink the loan. A concession should be a real credit on a fairly priced home.
How to Ask
Make the request specific and tie it to a purpose. “We’d like a $9,000 seller contribution toward closing costs and a rate buydown” is easier to say yes to than a vague request for “help.” Offer the seller options, such as a credit at a given amount or a price reduction at a smaller amount, so they feel in control. Frame it around closing cleanly, not around what they owe you. And present it in the first offer if the data supports it, instead of waiting for the inspection, when the seller may have already adjusted their expectations.
Concessions and the Appraisal
Because the contract price doesn’t change, a concession doesn’t alter what the appraiser needs to support. That makes it a cleaner tool than raising and lowering the price to move money around.
How I Approach It
Before we write an offer, I check the home’s days on market, price history, and the seller’s likely motivation, then ask your lender what the concession cap is for your loan. We decide in advance what the money should buy, whether closing costs, points, or a 2-1, so the ask has a purpose. I then structure the offer so the request is credible, and I have a fallback ready if the seller counters.
Common Mistakes
Asking for a concession on a brand-new, well-priced listing, then losing the home. Asking for more than the loan allows. Not deciding what the money is for. Padding the price to offset the credit. And forgetting that the credit can only cover eligible costs.
FAQ: Seller Concessions
Q: Can a seller concession pay for my down payment?
A: Generally no. Concessions apply to closing costs, prepaids, and buydowns, not the down payment itself.
Q: How much can a seller contribute?
A: It depends on your loan type and down payment. Conventional caps run from 3 to 9 percent of the price, FHA allows up to 6 percent, and VA allows up to 4 percent for concessions. Your lender confirms the exact limit.
Q: Will asking for concessions make the seller reject my offer?
A: It can on a fresh, competitive listing. On a home that has sat for several weeks, it’s often expected.
Q: Is a concession better than a lower price?
A: It depends on what you need. Concessions reduce your cash to close or your payment, while a price cut lowers the loan balance. Compare them for your situation.
Q: Can I negotiate concessions after the inspection?
A: Yes, often, though it’s usually stronger to build it into the offer, especially if the inspection reveals items that give you extra leverage.
Q: Do concessions affect my appraisal?
A: Not directly, since the contract price doesn’t change. But don’t inflate the price to offset a concession.
The right concession request, structured for your loan and the seller’s situation, can save you thousands. I help buyers decide what to ask for, how much the loan allows, and how to present it so it gets accepted.
If you’re preparing an offer, let’s build the strategy together.
(512) 217-3961
[email protected]
— Maria Aguirre
Mi Casa Agency | Keller Williams Lake Travis
