Seller Concessions
Seller concessions are closing costs or fees that the seller agrees to pay on behalf of the buyer as part of the purchase agreement.
Common concessions include covering a portion of closing costs, prepaid items, discount points, or buydown costs. The amount a seller can contribute is limited by the loan program — typically between 3% and 6% of the purchase price, depending on the loan type and down payment.
Seller concessions do not reduce the purchase price of the home. They reduce the amount of cash the buyer needs to bring to closing. The home still appraises at the contract price, and the loan amount is based on that figure.
Why This Matters: Negotiating seller concessions can significantly reduce your out-of-pocket costs at closing. In some cases, they can be used to buy down your rate — making them one of the most versatile negotiation tools in real estate.
Common question
What can seller concessions cover?
Closing costs, prepaid items, discount points, or buydown costs. The amount is limited by the loan program — often 3% to 6% of the purchase price depending on loan type and down payment.
Do seller concessions reduce the purchase price?
No. They reduce the cash you need at closing. The sale price and loan amount are still based on the contract price; the seller is just contributing toward your costs.
Related Mortgage Terms
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