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What is a seller concession?
What is a seller concession and how can it help me? This is one of the most common questions from a new home-buyer and is very simple to answer. A seller concession is a certain agreed upon amount of money that is given from the seller to pay for the buyers closing costs and/or prepaid items. Closing costs are items such as points, fees, title charges, etc..., while prepaid items are things such as escrow accounts, prepaid interest, etc... An example of how a seller concession might work would be:
Buyer A is buying a home from Seller B. Seller B is asking $104,900 for his house. Well with the market definitely being a buyers market right now and Seller Bs house being on the market for over 6 months, Buyer A wants to make a bid that is lower than Seller Bs asking price. Therefore Buyer A places a bid on the house with his Realtor for $100,000 with Seller B giving a seller concession of 3% for closing costs and/or prepaid items. Therefore, Seller B would be giving $3,000 to pay for the closing costs of Buyer A and Buyer A would not have to come up with any of this money out of his pocket to put towards closing. Basically Buyer A is getting the home itself for $97,000 if Seller B accepts Buyer As offer.
I hope the above example makes sense. Please email me at dave@gofirstsecurity.com or call me at 888-418-4467 to find out more information about how I can help you buy a home with no money out of your pocket or to explain the home-buying process further. Seller Concession - Seller Concessions are seller paid closing costs that are rolled into your mortgage loan.
Seller Concessions are typically used in 100% purchase transactions where the buyer is not putting any money down.
This helps the buyer pay for the closing costs associated with the loan process. Typically on 100% purchase transactions you are limited to a seller concession of 3% of the purchase price if you are obtaining financing from a conforming lender. This may or may not be enough to pay for all of the closing costs involved, depending on where it is that you are buying your home.
There are also many so-called "Non Conforming" or "Subprime" Lenders that will allow a seller concession up to 6% of the purchase price even on 100% purchase transactions. A seller concession is offered by the seller as an inducement to a prospective buyer to aid in the sale of a home. Ask your lender about new Fannie Mae and Community loan programs which may allow 6% seller's concessions on loans with as little as 3% downpayment. A seller concession must be clearly stated in your purchase contract and the contradcted sales price which includes the seller concession cannot exceed the listing price. Seller Concessions cannot be used towards the downpayment.
Contact If you have any questions regarding our products, you can contact us by calling or e-mailing us and we'll get back to you as soon as possible. Thanks!
Information listed above is to be used for educational purposes only and is not guaranteed
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