Seller Concessions (Paid Closing Costs)
Concession Guidelines by Loan Program
Closing Costs are a significant part of the expenses involved in purchasing a home and can make homeownership feel out of reach—especially for first-time buyers.
In recent years, competitive markets—with bidding wars and large due diligence fees—made sellers less willing to cover buyers' closing costs. However, as the market shifts toward a more balanced dynamic between buyers and sellers, there’s been a noticeable increase in seller receptiveness to covering these costs.
Seller concession guidelines vary by loan program, so it’s important to understand the limits when making an offer. Concessions can typically be applied to closing costs and settlement fees, including prepaids like property taxes and insurance. In some cases, other transaction-related fees—such as home inspections or required reports—may also be eligible.
Strategy: Sellers are usually focused on netting a certain profit from the sale. If they’re not open to paying closing costs directly, consider increasing your offer price by the amount of the requested costs. This allows them to maintain their net proceeds while reducing your out-of-pocket expenses.
Appraisal: Keep in mind that the increased offer must still be supported by the home’s appraised value. If the appraisal comes in low, it could require renegotiation to move forward.
Designated Amounts: Some sellers may agree to cover up to a specific amount in closing costs. This can be tricky, as it's difficult to match the exact numbers upfront. If the actual costs end up lower than the designated amount, you might not fully benefit unless the remaining funds can be applied elsewhere. In some cases, surplus funds can be used for discount points to lower your interest rate, or other eligible fees such as inspections.
Closing Cost Estimate: To avoid guesswork, work closely with your lender to create a solid estimate of your expected fees. Then, coordinate with your realtor to ensure the right amount is requested in your offer.
