The real estate market is shifting. In some areas of the country, it has
flipped to a strong buyer’s market. Sellers challenged by this change are
looking for creative ways to attract buyers. In addition, buyers suddenly in
the driver’s seat are asking for more concessions from sellers than ever

Seller concessions are a useful tool in real estate. Used correctly, it can
benefit both buyer and seller. For example, concessions can be offered in
lieu of seller repairs or upgrades, saving out-of-pocket cash in an uncertain
market. Buyers can also benefit from “financing” some of their own
out-of-pocket costs for specified fees and charges.

However, there are limits to what the lender will accept for seller
concessions, and understanding this ahead of time can save time and
frustration. Here is a snapshot of the most common loan types and
concessions possibly allowed (always check with your lender).

Conventional (Fannie Mae/Freddie Mac):

· 25% down payment – 9% concessions
· 10-25% down payment – 6% concessions
· <10% down payment – 3% concessions


· 6% maximum concession


· 4% closing costs concession


USDA allows the seller to pay all the closing costs and prepaid for the
buyer with no percentage limit. Other restrictions and considerations apply,
so speak with your lender.


Seller concessions are a great way to save cash on both sides. Used
properly, it can be a great tool to put real estate transactions together in a
challenging market.