Seller concessions are closing costs or fees that a seller agrees to cover to help reduce a buyer’s upfront expenses. These costs are negotiated during the offer process, and seller concessions can make a home purchase more affordable without lowering the home’s sale price. In the first quarter of 2025, 44.4% of U.S. home sale transactions included seller concessions — the highest share in several years.
Buyer demand and market conditions determine how likely you are to receive seller concessions, but knowing how they work gives you an advantage when you’re preparing an offer. Instead of focusing only on price, understanding seller concessions helps you evaluate the true cost of buying a home and identify opportunities to reduce your upfront expenses. This guide explains what seller concessions typically include, when buyers benefit most from them, and how to use them strategically in today’s housing market.
What are seller concessions in real estate?
Seller concessions are financial contributions a seller makes to help reduce a buyer’s out-of-pocket expenses at closing. These contributions can cover a range of fees, including lender charges, title and escrow costs, prepaid taxes, homeowners insurance, or even the cost of a home warranty.
An example of seller concessions: Covering closing costs
A buyer might negotiate $5,000 in seller concessions to help offset closing costs. If the seller agrees, the amount is included in the purchase contract and applied at closing, lowering the buyer’s upfront expenses while being deducted from the seller’s proceeds.
An example of seller concessions: Buying down the interest rate
A buyer may also request seller concessions to buy down their mortgage rate. For instance, a seller could contribute $7,500 toward discount points, allowing the buyer to secure a lower interest rate and reduce their long-term monthly payments. This type of concession can make the home more affordable over time, especially when rates are elevated.
What closing costs do seller concessions cover?
The seller may be able to cover part or all of these closing costs:
Property taxes: Prepaid property taxes through the end of the year at closing.
Title insurance: Title insurance protects you and your lender if someone comes forth with a claim for the home’s title.
Loan origination fees: These origination fees cover your lender’s charges for processing your loan.
Inspection fees: Inspection fees cover the cost of inspections required for the loan. For example, in some states and on some loans, a pest inspector must evaluate your property before a sale can go through.
Recording fees: Recording fees cover the expense of documenting your home’s purchase with your local government.
Appraisal fee: This covers the cost of getting a licensed third-party appraisal of the home to determine the market value.
Attorney’s fees: In some states, you need an attorney to review closing documents. Attorney’s fees cover the cost of a real estate attorney.
Points: Mortgage points (also known as discount points) are upfront interest you pay to reduce your interest rate.
Once you apply for your loan, your lender will provide you with a Loan Estimate, which outlines all your estimated closing costs. You can then work with your real estate agent to decide which ones to ask the seller to pay for.
Why do sellers offer concessions?
Sellers might agree to concessions to:
Help a buyer afford the home
Attract more offers in a slow market
Offset issues found during the home inspection
Speed up the closing timeline
In a buyer’s market or when a home has been sitting for a while, concessions can make the difference between closing a deal and continuing to wait.
Who benefits from seller concessions?
Seller concessions can create advantages for both buyers and sellers during a home sale. For sellers, offering concessions can make their home more appealing in a competitive or buyer-friendly market. A concession can help attract more offers, shorten time on market, or encourage a buyer to choose their home over similar listings.
Buyers also benefit from seller concessions, especially those who need help covering upfront costs. Many first-time buyers underestimate how much they’ll need at closing, and seller concessions can reduce expenses like lender fees, taxes, and insurance. By lowering the cash required at closing, seller concessions can make the overall purchase more affordable and accessible.
Seller concession limits by loan type
Loan Type
Max Seller Contribution
Conventional (<10% down)
3% of the purchase price
Conventional (10–25% down)
6%
Conventional (25%+ down)
9%
FHA Loan
6%
VA Loan
4%
USDA Loan
No formal limit (but should be reasonable)
These limits are set by the loan program, not the seller, so both buyers and sellers should work with a lender to ensure compliance.
Pros and cons of seller concessions
For buyers
Lower upfront costs when buying a home: Seller concessions can significantly reduce the cash a buyer needs at closing by covering expenses like lender fees, taxes, and homeowners’ insurance. This makes buying a home more affordable, especially when buyers are also saving for their down payment.
More financial flexibility for buyers: By lowering out-of-pocket closing costs, seller concessions allow buyers to keep more money set aside for moving expenses, home repairs, furniture, or emergency reserves. This added flexibility can be especially helpful after making a sizeable down payment.
Easier loan approval in some cases: Reduced cash-to-close requirements can help some buyers — particularly first-time homebuyers — qualify more easily for a mortgage. With fewer upfront costs, seller concessions can help bridge the gap between available savings and the total cost of buying a home.
For sellers
Attracts more buyers: Offering seller concessions can draw in buyers who may not have enough cash for closing costs.
Helps protect the sale price: Instead of lowering the list price, sellers can use concessions to keep the contract price intact while still offering value.
Useful in shifting or slow markets: Seller concessions can help a property stand out when inventory is high or demand is softer.
Potential downsides
Possible drawbacks of seller concessions
Risk of appraisal issues: If the sale price is increased to include seller concessions, the home may not appraise at the higher amount.
Reduces seller’s net proceeds: Any concession provided lowers the seller’s bottom line at closing.
Less effective in strong seller’s markets: When demand is high and competition is strong, sellers typically don’t need to offer concessions.
>> Read: Disadvantages of Sellers Paying Closing Costs
Tips for negotiating seller concessions
Understand how much you’ll need for closing costs before submitting an offer.
In competitive markets, offer a slightly higher price to offset the seller’s concession.
Be prepared to justify the request with your financing needs or inspection findings.
Work with an experienced Redfin real estate agent to guide your strategy.
FAQs about seller concessions
What is the meaning of seller concessions in real estate?
Seller concessions are costs the seller agrees to pay on behalf of the buyer, typically to cover some or all of the buyer’s closing costs.
Are they negotiable?
Yes, they are typically negotiated as part of the initial offer and finalized in the purchase agreement.
Do they affect the loan or appraisal?
They can. If the concessions push the sale price above market value, the home may not appraise at the agreed price.
Can they cover the down payment?
No. Concessions can only be used for allowable closing costs and fees, not for the buyer’s down payment.
Are they common?
They are especially common with FHA, VA, and USDA loans or when the market favors buyers.
A final note
Seller concessions are more than just financial assistance — they’re a strategic negotiation tool that can benefit both buyers and sellers. Buyers can use them to lower upfront costs and make a purchase more affordable, while sellers can use concessions to attract stronger offers or move a home faster without reducing the list price. Understanding how seller concessions work and when to request or offer them can give you a meaningful advantage in today’s real estate market.
