With a hot seller’s market over the past few years there hasn’t been a lot of chatter about seller concessions. In order to be competitive buyers have been coming to the table with over-asking price offers and foregoing crucial diligence pieces like inspection periods.
So the idea of sellers offering concessions fell off the radar. But the markets are beginning to adjust, buyers are regaining some leverage, and sellers should be wise to find some flexibility to help close a deal.
Offering concessions is one of the best bargaining tools a seller has, and as we prepare for a busy spring, I thought it would be a good idea to talk about seller concessions, what they might consist of and how they can actually help a seller gain the most equity on the sale of their home.
Let me start by defining seller concessions. We’re talking about the seller covering home buying costs on behalf of their buyer.
Even with a hot seller’s market, sellers offering concessions isn’t new or obsolete. According to the National Association of Realtors, nearly 1 in every 4 real estate transactions in 2024 came with concessions from the seller.
Before I go into details on the types of concessions sellers can offer, I want to explain why this is such an effective and helpful tool to help close a deal.
Seller concessions are often a win-win scenario. The seller almost never has to cough up money directly from their pocket. Concessions often get subtracted from the final profits at closing. So while the seller ultimately loses the money, it’s only taken off the top of their profit.
Of course, this does mean the seller has lost this money. It is, after all, a concession. But consider that you, as a seller, have received an attractive offer and are on the cusp of closing on the sale of your property.
You can walk away without offering concessions and take another chance on the market, or you can consider giving up a little off the top to save time, stress, and, as often is the case, save more money.
According to a study by Zillow, homes that were on the market for just two months sold at 5% below asking price.
If we understand the inverse relationship between the amount of time a home stays on the market, and the ultimate sale price compared to its original listing price, we can better understand the potential savings a seller might make in offering concessions.
So what kind of concessions can a seller offer?
The most common concession is helping with closing costs. Buyers end up on the hook for a lot of charges and fees associated with buying a home, especially if they’re financing their new home, which comes with a down payment, appraisal fees, title insurance and other costs to close.
Sellers can offer to help pay down closing costs and lower a buyer’s cash-to-close, or the money they need to come up with to close the deal, making the deal more enticing.
Another easy concession is lowering the sale price. Instead of paying out of pocket for needed home repairs or potential problems with the home, the seller can lower the price to help offset future costs that the new buyer will incur as they make the home theirs.
Finally, a seller can add a home warranty to help give a buyer peace of mind when buying their home. Offering coverage for repairs for a certain time period, usually one year, can be a valuable bargaining chip for sellers to offer and sweeten the deal.
There are many different and creative ways a seller can help move a deal forward and push a buyer to close, giving buyers peace of mind and helping sellers avoid a lengthy and potentially costly home sale process.
Real estate transactions are complicated and complex, and I don’t want to suggest that seller concessions are always the best choice for a client. There are a lot of factors a seller needs to consider when deciding to sign and close on their deal.
Having a reliable, diligent and trustworthy agent will help you prioritize the important factors incorporated in your real estate transaction, providing you with all the information you need to make the best decision.
