Seller Concessions Explained: When to Concede, How Much, and What to Avoid

Seller concessions are credits or costs the seller agrees to pay on behalf of the buyer. The most common type is a closing cost credit — the buyer asks you to pay part of their closing costs, which gets folded into the final sale price and reduces how much cash the buyer needs at closing.

In 2025, roughly 20–25% of home sales included some form of seller concession, according to Redfin data. In a buyer's market, that number climbs to 40% or more. In a hot seller's market, it can drop below 10%.

Understanding concessions — what's normal, what's too much, and when to say no — can save you thousands.

What Are Seller Concessions?

Seller concessions are anything of value that the seller provides to the buyer as part of the transaction. They include:

Closing cost credits

The most common concession. The buyer asks you to pay a percentage of the sale price toward their closing costs (lender fees, [title insurance](/blog/title-search-explained), prepaid taxes, insurance, etc.).

Example: On a $400,000 sale, a buyer asks for 3% in closing cost credits. You agree to pay $12,000 toward their closing costs. Your net proceeds drop by $12,000.

Why buyers ask for this: Many buyers, especially first-time buyers, have saved enough for a down payment but are short on the additional 2–4% needed for closing costs. A closing cost credit lets them get into the home without depleting their savings entirely.

Repair credits

Instead of making repairs identified during the home inspection, you give the buyer a credit at closing so they can handle the repairs themselves after moving in.

Example: The inspection reveals a 20-year-old HVAC system and some minor plumbing issues. Instead of hiring contractors and managing repairs during the escrow period, you offer a $5,000 repair credit.

Price reductions

Technically not a "concession" but functionally the same. The buyer asks you to lower the price after an inspection or appraisal issue.

Home warranty

You purchase a home warranty ($400–$600) that covers major systems and appliances for the buyer's first year. This is a low-cost concession that provides significant peace of mind for nervous buyers.

Rate buydowns

A newer concession type that's grown in popularity during the high-rate environment of 2024–2026. Instead of reducing the price, you pay [discount points](/blog/mortgage-points-explained) to buy down the buyer's mortgage rate for the first 1–3 years (a temporary buydown) or permanently.

Example: On a $400,000 loan, paying 1 point (1% = $4,000) reduces the interest rate by approximately 0.25%. A 2-1 buydown might cost $8,000–$12,000 but makes the buyer's payment significantly more affordable in years one and two.

Why this works: A rate buydown can be more valuable to the buyer than an equivalent price reduction. Reducing the price by $10,000 saves the buyer about $50/month on their mortgage. A temporary buydown worth $10,000 might save them $200–$400/month in the first year.

Other concessions

• Paying the buyer's agent commission
• Leaving appliances, furniture, or other personal property
• Paying HOA transfer fees or assessments
• Covering survey costs
• Extending the closing date at the buyer's request

Loan-Type Limits on Seller Concessions

Lenders cap how much the seller can contribute toward the buyer's costs, based on the loan type and down payment:

Conventional loans (Fannie Mae / Freddie Mac)

FHA loans

• Maximum 6% of sale price, regardless of down payment.

VA loans

• Maximum 4% of sale price for certain costs (discount points, prepaid items, buyer's debts). The seller can also pay all normal closing costs without that counting toward the 4% cap.

USDA loans

• Maximum 6% of sale price.

Cash buyers

• No lender limits. Concessions are whatever you negotiate.

Why this matters: If a buyer with 5% down on a conventional loan asks for 5% in closing cost credits, their lender won't allow it. The max is 3%. Know the limits before negotiating so you don't agree to something that can't close.

When to Offer Concessions

1. To keep a deal alive after inspection

The inspection is the most common point where concessions come into play. The buyer's inspector finds issues — some real, some minor — and the buyer asks for repairs or credits.

Smart approach:

• Address safety and structural issues (electrical, foundation, roof, HVAC). These are legitimate concerns.
• Push back on cosmetic issues. Scuffed paint, worn carpet, and minor caulk gaps are normal wear and tear, not concession-worthy.
• Offer a credit instead of making repairs yourself. Credits give you cost certainty. Hiring contractors during escrow introduces risk — work might not be done on time or to the buyer's satisfaction.

2. To beat the competition in a buyer's market

When inventory is high and buyers have options, concessions can make your listing stand out. Advertising "seller will contribute up to 3% toward closing costs" in the listing attracts budget-conscious buyers who might otherwise pass.

3. To bridge an appraisal gap

If the appraisal comes in low, you might need to reduce the price or offer concessions to save the deal. This is a straightforward negotiation: the home appraised at $385,000 instead of $400,000, and both parties need to agree on how to close the gap.

4. To attract first-time buyers

First-time buyers often have limited cash reserves. Closing cost concessions make your home accessible to a larger pool of buyers. In markets with high first-time buyer activity (starter homes, entry-level price points), concessions are standard.

5. To offset the rate environment

When mortgage rates are 6–7%, buyers feel payment pressure. A temporary rate buydown concession can be the difference between a buyer who can afford your home and one who can't. It costs you the same as a price reduction but delivers more impact.

When to Say No to Concessions

1. In a strong seller's market

If you have multiple offers, you have leverage. Buyers asking for concessions in a competitive situation are unlikely to win. Favor clean offers with fewer demands.

2. When the request is disproportionate

A buyer asking for 5% in concessions on top of a below-asking offer is trying to get your home for 10%+ below market. Counter firmly or decline.

3. When the inspection issues are cosmetic

Not everything in an inspection report warrants a credit. A 15-year-old water heater that's functioning normally doesn't need replacement. Worn carpet is visible in photos — the buyer saw it before making an offer.

A good rule of thumb: If the buyer could see the issue during their showings, it shouldn't be a post-inspection concession request. Concessions should address genuinely hidden issues that the inspection revealed.

4. When it pushes you below your bottom line

Know your minimum net proceeds before listing. If concessions drop you below that number, either renegotiate or walk away. Some deals aren't worth saving.

5. When it jeopardizes the appraisal

Here's a subtlety many sellers miss: if you agree to a high price with large concessions, the appraiser may flag it. A home listed at $400,000 with $20,000 in concessions effectively sold for $380,000 in the appraiser's eyes. If the home can't appraise at $400,000, the deal collapses anyway.

How to Negotiate Concessions Effectively

1. Get a home inspection before listing (pre-inspection)

A pre-listing inspection costs $300–$500 and eliminates the biggest source of surprise concession requests. When you know about issues upfront, you can fix them before listing (at your own pace and price) or price accordingly. No surprises = no emergency concessions.

2. Separate concession types in your negotiation

Closing cost credits are different from repair credits. If a buyer asks for $15,000 in "concessions," break it down:

• $8,000 in closing cost credits (to reduce their cash needs)
• $5,000 in repair credits (for inspection items)
• $2,000 for a home warranty and miscellaneous

Now you can negotiate each piece. Maybe you'll agree to the closing cost credit but push back on the repair amount.

3. Counteroffer with a higher price

If a buyer offers $390,000 with $12,000 in concessions (net to you: $378,000), you can counter at $400,000 with $12,000 in concessions (net to you: $388,000). The buyer still gets their closing cost help, and you get closer to your target.

Important: This only works if the home appraises at the higher price. If it won't, this strategy backfires.

4. Use concessions as a negotiation tool, not a default

Don't offer concessions preemptively unless market conditions demand it. Let the buyer ask, then negotiate. You might be surprised — many buyers, especially cash buyers and those with significant savings, don't ask for any concessions.

5. Get everything in writing

Verbal agreements mean nothing in real estate. Every concession should be documented in the purchase agreement or an amendment, specifying the exact dollar amount and what it covers.

The Math: How Concessions Affect Your Net Proceeds

Let's compare two scenarios on a $400,000 home:

Scenario A: No concessions

• Sale price: $400,000
• Agent commissions (5%): −$20,000
• Closing costs (2%): −$8,000
• Net proceeds: $372,000

Scenario B: 3% closing cost credit + $5,000 repair credit

• Sale price: $400,000
• Closing cost credit to buyer (3%): −$12,000
• Repair credit: −$5,000
• Agent commissions (5%): −$20,000
• Closing costs (2%): −$8,000
• Net proceeds: $355,000

That's a $17,000 difference. Concessions add up fast.

Scenario C: Higher price with concessions

• Sale price: $412,000
• Closing cost credit to buyer (3%): −$12,360
• Repair credit: −$5,000
• Agent commissions (5%): −$20,600
• Closing costs (2%): −$8,240
• Net proceeds: $365,800

By countering with a higher price, you recovered about $11,000 compared to Scenario B — assuming the home appraises at $412,000.

Concessions by Market Type

Seller's market (low inventory, high demand)

• Concessions are rare (under 10% of sales).
• Buyers compete on clean terms. Asking for concessions weakens their offer.
• If you receive a concession request, you can likely reject it and accept a competing offer.

Balanced market

• Concessions occur in 15–25% of sales.
• Small closing cost credits (1–2%) are common.
• Repair credits are negotiated, not assumed.

Buyer's market (high inventory, low demand)

• Concessions occur in 30–50% of sales.
• 3% closing cost credits become standard expectations.
• Repair credits increase in scope.
• Sellers may need to proactively offer concessions to attract buyers.

FAQs

What's the average seller concession amount?

In 2025, the average was approximately 1.5–3% of the sale price nationally, though it varies significantly by market, price point, and property condition.

Do seller concessions affect my taxes?

Concessions reduce your net sale price for tax purposes. If you sell for $400,000 with $12,000 in concessions, your effective sale price for capital gains calculations is $388,000. Consult a tax professional for your specific situation.

Can the buyer use concessions for their down payment?

No. Lenders do not allow seller concessions to be applied toward the buyer's down payment. Concessions can cover closing costs, prepaid items, and rate buydowns — but not the down payment itself.

Should I offer concessions in my listing?

In a buyer's market, advertising "seller willing to contribute toward closing costs" can increase interest, especially from first-time buyers. In a seller's market, don't advertise concessions — you're signaling willingness to give money away when you don't need to.

What if the buyer asks for concessions after the inspection?

This is normal and expected. Review the inspection report, separate legitimate structural/safety concerns from cosmetic issues, and negotiate accordingly. You're not obligated to agree to anything — but refusing all concessions may cause the buyer to exercise their [inspection contingency](/blog/contingencies-explained) and walk away.

Can I offer a concession instead of making repairs?

Yes, and many sellers prefer this. A repair credit gives you cost certainty and avoids the hassle of managing contractors during escrow. Buyers often prefer credits too because they can choose their own contractors and handle repairs on their timeline.

What happens if I agree to concessions but the appraisal comes in low?

The concessions are based on the sale price, not the appraised value. If the price drops due to a low appraisal, you'll need to renegotiate the concessions proportionally. For example, if you agreed to 3% of $400,000 ($12,000) but the price drops to $385,000, the 3% becomes $11,550.

The Bottom Line

Seller concessions are a normal part of real estate transactions. They're not a sign of weakness — they're a negotiation tool. The key is understanding when concessions make strategic sense, what the limits are, and how to structure them so you protect your bottom line.

Know your market, know your numbers, and negotiate each concession on its merits. Some concessions save a deal that's worth saving. Others are unnecessary giveaways. Your job is to tell the difference.

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