Seller Concessions
Seller concessions are costs a seller agrees to cover on the buyer's behalf, most often a credit toward the buyer's closing costs or a repair allowance. They reduce the seller's net proceeds and are negotiated as part of the purchase contract.
A seller concession is money the seller agrees to put toward the buyer’s costs to help a deal close. The most common form is a credit toward the buyer’s closing costs, but concessions can also cover a repair the buyer wants done, a temporary interest-rate buydown, or a home warranty. The credit is recorded in the contract and comes out of the seller’s proceeds at closing.
Concessions became more visible after buyer-agent compensation moved off the Multiple Listing Service, since a buyer who is paying their own agent may ask the seller for a credit instead. Loan programs cap how much a seller can contribute, with the limit depending on the loan type and the buyer’s down payment. On a net sheet, concessions are a line item that lowers the seller’s walk-away amount dollar for dollar.
Used in these calculators
Guides that put this term to work
Related terms: Closing Costs , Cash to Close , Transfer Tax
Source: Consumer Financial Protection Bureau, Owning a home
Last updated . Part of the FinExplained finance glossary .