One important aspect of real estate negotiations is the determination of seller concessions. Buyers may want to request seller assistance with closing costs or covering repairs identified in a home inspection. Generally, the best time to ask for concessions should be after the buyer and seller agree on a purchase price. Once you agree in principle on price, then you can mine down and negotiate on specific concessions. A seasoned real estate agent can guide you through the process and ask for a seller concession on your behalf, as to not make negotiations personal, especially when asking for personal and sentimental items from the home, in a bill of sale..
Understanding seller concessions
A seller concession is often a monetary amount given by the seller to assist the buyer in the home purchase. According to the Greater Atlanta Home Builders Association, the average seller concession in the Atlanta metropolitan area is $5,000. When offering a concession, a seller may agree to pay some or all of the closing costs, which are typically the buyer’s responsibility. In return, the buyer would agree to increase the purchase price of the house by the same amount and apply for a larger mortgage loan to cover the difference. This lowers the amount of money the buyer needs to bring to closing, but increases their home loan amount. Also, if repair items are noted in a home inspection, a seller may offer a monetary concession rather than fixing or replacing an item.
Present your best offer first
Many real estate agents have a predetermined strategy regarding seller concessions. Duffy Realty recommends the buying strategy of first writing a strong offer and presenting it to the seller. Buyers should not request concessions before they have met the seller on price. After a sales price has been agreed to by both parties, you can proceed to the finer details of negotiation, including seller concessions.
Sellers stand firm
As a seller, you should not advertise your willingness to provide concessions to potential homebuyers. Once you delve deeper into serious negotiations with a buyer, you can begin to think about concessions. When showing your home, consider saying “an allowance is available” if you will consider granting a seller concession. Never approve a concession before you have agreed on a price with your buyer. That way as a seller, you can use that concession as a bargaining chip during the final stages of negotiations, where every little item can mean the difference in a contract consummating or one falling apart.
Most lenders limit seller concessions to a certain percentage of the sales price. Working within those dollar limits, concessions can benefit buyers because they need to bring less money to the settlement table. Sellers also benefit when using concessions as a way to finalize a deal with a strong buyer. If you are interested in learning more about seller concessions, consult your real estate agent, one with a long history of contracts, prior to negotiating a sale.
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