3 Secrets Top-Selling Agents Will Tell You About Seller Concessions

Ask any top-selling agents and they will tell you that one of the best ways to reduce the total costs of buying a home is to navigate seller concessions. Seller concessions are when the seller agrees to a sale’s term to help push the deal forward.

Seller Concessions Explained

In some cases, a seller concession involves the seller giving something to the buyer — perhaps the seller agrees to include all of the living room furniture within the final sale’s price of the home.

Another form of seller concessions occurs when the seller agrees to something proposed by the buyer —  in most cases, sellers agree to pay for the deal’s closing costs. Or, perhaps the seller agrees to purchase a home warranty policy for the buyer.

Ultimately, seller concessions can introduce major benefits to the buyer if navigated correctly.

Secrets of Top-Selling Agents for Seller Concessions

If you’re working with top-selling agents, they’ll be able to help you maximize the potential savings by leveraging strategies for seller concessions. On the other hand, working with a professional that is not a top agent in your community may not give you access to the best industry insights regarding seller concessions.

If you want to gain access to the best savings opportunities through seller concessions, partner with a top-performing agent in your market.  

To give you a sneak peek of what it’s like working alongside a top-selling agent, here are three seller concession strategies that the best in the business will share with you.

#1. Know the Seller Concession Limits Based on Mortgage Type

All top selling agents know that the total amount of concessions that sellers can give to buyers is limited when the buyer funds their purchase with a mortgage loan.

Conventional Loans:

• With less than 10% down, the maximum seller concessions are 3% of the appraised value of the home.
• Between 10% and 24.99% down,  the maximum seller concessions are 6% of the appraised value of the home.
• With over 25%  down, the maximum seller concessions are 9% of the appraised value of the home.
  

FHA Loans:

• With any down payment, the maximum seller concessions for an FHA loan can total no more than 6% of the appraised value.
  

VA Loans:

• With any down payment, the maximum seller concessions for a VA loan can total no more than 4% of the appraised value.
  

USDA Loans:

• With any down payment, the maximum seller concessions for a USDA loan can total no more than 6% of the appraised value.
  

Understanding the total cost of concessions allows top-selling agents to form a strategy that works best for the buyer’s unique position.

For example, if a buyer has a conventional mortgage with 20% down, the maximum seller concession is 6% of the appraised value of the home. Top selling agents will analyze the transaction and find the most opportune area to negotiate a seller’s concession based on the circumstance.

#2. Use Seller Motivations as Negotiation Leverage

While all buyers are likely interested in reducing the costs of buying a home through seller concessions, top-selling agents know when it’s appropriate for a buyer to request concessions from a seller.

One of the most important strategies that top-selling agents apply when seeking concessions for their buyer clients is to make sure that the request offers some sort of benefit to the seller.

For example, if you’re purchasing a home that has been sitting on the market for some time, it’s likely that the seller would be willing to agree to concessions in exchange for you closing the sale.

Or, perhaps a seller is looking to avoid making renovations to their property because they are selling on a constrained timeline. Instead of pushing the seller to make the renovations themselves, top-selling agents may choose to request a home improvement credit as a seller concession. This creates a win-win situation, where the seller meets their timeline and the buyer gets the property improved on the seller’s dollar.

Top selling agents are always able to identify the needs of the seller to give their concession request more negotiation power.

#3. Always Look at the Big Picture of Concessions

While inexperienced buyers may be eager to get as many seller concession credits as possible, top-selling agents always play the long game with concessions. In some cases, it’s better to get one strong concession than three smaller-impact concessions.

Top selling agents always run comparables to determine which concessions introduce the most strategic benefits to the buyer. Thinking about the upfront savings of a concession versus the long-term expenses that would result from the cost being bundled into the mortgage or closing costs allows top agents to make the best recommendations for their clients.

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If you want to work with a top-selling agent to help you navigate seller concessions and more, get connected with the best agents in your area!