13 Best Seller Concessions to Request When Buying a Home

With home buyers holding more leverage than they have in years, seller concessions are on the rise. Nearly half of all sellers offered at least one concession — almost double the rate from a year ago. That’s a stunning turnaround from the pandemic-era market, when sellers basically called all the shots.

There are several factors causing this new golden age of concessions. One is a recent federal lawsuit that changed how commission is paid. Now that sellers are no longer required to pay real estate commission to both agents, many buyers have adapted by asking for a seller concession to cover their commission rather than pay it out of pocket.

Another factor is that home prices remain near all-time highs, requiring many buyers to cut costs any way they can — from hiring low-commission real estate agents to negotiating seller concessions. Finally, high mortgage rates have dramatically decreased the number of buyers, forcing many sellers, especially first-time sellers, to offer concessions just to get buyers in the door.

If you’re looking for a home, you should definitely ask for seller concessions. Before you start making a long list of demands, remember that your mortgage may come with strict limits on the amount of concessions you’re allowed to accept.

• If you have a conventional loan, Fannie Mae and Freddie Mac have rules that limit transactions to 3% to 9% of the home’s purchase price, depending on the amount of your down payment and other factors. If you put down less than 10%, your seller concessions are limited to 3%, but a 10% to 25% down payment moves that up to 6%.  A down payment of more than 25% gets you the maximum 9%. However, if the loan is for an investment property, you can only accept 2% of the purchase price as concessions.

• If you have a Federal Housing Administration loan, your seller concessions are strictly capped at 6% of the home’s selling price or the appraised value, whichever is less.

• If you have a Veterans Administration loan, you can only accept 4% of the purchase price as seller concessions. Furthermore, there are other restrictions and requirements, such as the seller is required to pay for the termite report, brokerage fees, and real estate commission. The VA funding fee and the VA loan origination fee is up for negotiation.

Make sure you understand your loan’s concession limits before you start negotiating.

The Best Seller Concessions to Request

The most straightforward concessions to ask for consist of fees that generally make up closing costs. These are widely accepted as fair game for negotiation, and nearly all lenders will allow the seller to pay for them.

1. Buyer’s agent commission

Now that the NAR settlement has released sellers from having to pay both agents, buyers are technically responsible for paying their own agent out of pocket. A seller concession to cover the buyer’s agent commission has rapidly become one of the most popular seller concessions.

For buyers who don’t have the leverage to negotiate this, hiring a low-commission real estate agent or taking advantage of a home buyer rebate program can help offset this cost.

2. Transfer taxes

This tax is charged by the local state or county government on the transfer of a property’s title from one party to the other. Many agents say buyers are often surprised by the amount of transfer taxes they have to pay on their home purchase, making this another popular concession to ask for.

3. Property taxes

Many buyers, especially first-time buyers, don’t know that property taxes often have to be paid in advance before closing. Having the seller cover this significant cost can be a big financial relief.

4. Inspection fees

Buyers should always get a home inspection to ensure they aren’t buying a home with hidden problems. If the seller pays for it, it can save buyers several hundred dollars.

5. Credit report fees

When you apply for a mortgage, the lender will usually charge for the credit report they pull to check your financial health. Although it’s generally small, paying this fee can be an important symbolic gesture from the seller.

6. Attorney fees

Many states require an attorney to preside over closing. Most lawyers who provide this service charge a flat fee, although some may charge hourly on occasion.

7. Home appraisal fees

The lender will want a home appraisal to make sure the property is actually worth the amount they’re loaning the buyer. The appraisal fee is generally charged to the buyer, but it’s eligible to be covered by a seller concession.

8. Origination fee

This is the fee the lender charges the buyer to open and process their loan application, and the cost can be significant.

9. Title insurance

This type of insurance protects the buyer against future liability arising from undiscovered flaws in the title, such as outstanding liens or other claims. This is an important protection for buyers to have and can cost in the low four figures.

10. Mortgage points

This is a very popular seller concession in an era of historically high mortgage rates and one of the best long-term mortgage strategies. This is essentially an upfront payment to the lender to lower the loan’s interest rate — a concession that can save buyers a huge amount over the life of the loan.

Some Creative Concessions

The following concessions are slightly less common, but buyers should pursue them if they’re in a strong buyer’s market that gives them leverage.

11. Appliance upgrade or credit

You could ask the seller to either buy new appliances before you move in or give you a credit for the cost of a new set of appliances.

12. Home warranty

A home warranty covers major appliances and home systems, such as the plumbing, HVAC, or electrical. If one of these fails, a home warranty covers the cost of repairs or replacement. This is an especially popular concession for buyers moving into an older home.

13. Repairs

If your home inspection found problems, you can ask the seller to fix them before closing or give you a credit toward fixing them yourself. The choice between getting a credit or having the seller perform repairs will probably depend on whether you’re in a hurry to close.