13 Things First Time Home Buyers should Know About Seller Concessions
Good morning, one term you may hear during your home buying or selling process is seller concession. Seller concessions can be beneficial for all parties in a real estate transaction. A seller concession is an agreement between the buyer and seller in which the seller agrees to covers a portion of the buyer's expenses. Please keep in mind that this is not something the seller has to agree to. Some sellers can and will refuse to pay any concessions at all. Yet, it never hurts to ask. Nicely.
A home buyer's agent can ask for seller concessions during different times in the home buying and home selling process. For example, once the inspection has been completed, the buyer can request that the seller pay for certain repairs. This however, does not mean that the seller will do so. While the seller may opt to pay for certain items, the seller may also refuse to pay for others. Below is a list of the benefits and limits of seller concessions:
Seller concessions can include appraisal fees, Loan origination fees, home inspection and title search fees, credit report fee, tax fee and discount point charges
Seller concessions are more likely in a buyers' market than in a sellers' market
Concessions benefit both buyer and sellers
Seller concessions helps to reduce the upfront cost the buyer need to pay.
Seller concession may help a home to sell more quickly
For conventional loans with down payment less than 10% the seller concession can be up to 3%. With down payment between 10% and 25% concession can be up to 6% and 9% if your down payment is 25% or more.
FHA have a maximum concession amount of 6% of the purchase price and cannot be applied to your down payment.
VA loans limit seller concession to no more than 4% of the purchase price
USDA home loan limits seller concessions to 6% of the purchase price
Your mortgage lender needs to approve seller concession
Seller concession can cover either specific costs or pay a fixed amount of the total closing cost
The seller is the only one that can make the decision to contribute or not to contribute.
As always, thank you so much for stopping by. Until next time...Diana
