What is a sellers concession?

I've heard this term and should know since I own a home but .... don't.

Re: What is a sellers concession?

A seller's concession is if the buyer doesn't have the money for closing costs, they add about $20K to the mortgage costs, but the SELLER gives it to the buyer at closing for the costs, but the buyer actually pays for it thru their mortgage.

ETA:

House was agreed at $300,000
Seller's Concession is $320,000
Buyer takes mortgage for $320,000
Seller gives $20K + plus cost of downpayment at closing for the buyer to use to pay off closing costs.

Message edited 2/21/2007 11:15:11 AM.

Re: What is a sellers concession?

A seller's concession helps a borrower to pay some or all of their closing costs. A seller's concession is written into the purchase agreement usually before placing a bid on a property. Anywhere from 3%-6% (this is a percentage of the purchase price) is a typical seller concession. This is helpful for borrowers who do not have the necessary amount of money to pay for closing costs and for borrowers who would rather hold onto their money instead of tying it up into their mortgage.
Example of how a seller concession works:
House for sale, asking price 100,000, you place a bid for 98,000 and request the seller pays 3% of your settlement charges. Seller concession amount is equal to $2,940 to be used to pay for your closing costs.

hth

Re: What is a sellers concession?

A concesssion is a %age of the agreed offer on the house - usually to help the buyer pay closiing costs.
If you did a 3% concession on a $300,000 house, your total mortgage would be $309,000. (minus and money you are putting down).

At closing, YOUR bank cuts the seller a check for $309K, and then the seller gives you $9,000 from that.
So the seller gets the full amount of the accepted offer and you took a higher mortgage to pay for closing costs.

The thing you have to watch out for is that the house appraises for at least the $309K. The bank is not going to give you more money than the house is worth.

Does this make any sense?

Re: What is a sellers concession?

Sounds risky for the seller and a hassle....no??

Re: What is a sellers concession?

Re: What is a sellers concession?

we had to do this on our house. We didn't have an extra 20,000 for closing so we inflated the price of the house by 10K. The seller agreed and we get that back at closing.

Re: What is a sellers concession?

Posted by SupportACop

we had to do this on our house. We didn't have an extra 20,000 for closing so we inflated the price of the house by 10K. The seller agreed and we get that back at closing.

Re: What is a sellers concession?

Posted by Wendy1220

Posted by SupportACop

we had to do this on our house. We didn't have an extra 20,000 for closing so we inflated the price of the house by 10K. The seller agreed and we get that back at closing.

What do you mean you get it back at closing? I'm confused about this. If the sellers concession doesn't equal the amount of the closing costs, am I correct that the buyer still has to come up with the extra money, yet mortgaged more than the agreed price?

Re: What is a sellers concession?

Posted by SweetTooth

Posted by Wendy1220

Posted by SupportACop

we had to do this on our house. We didn't have an extra 20,000 for closing so we inflated the price of the house by 10K. The seller agreed and we get that back at closing.

What do you mean you get it back at closing? I'm confused about this. If the sellers concession doesn't equal the amount of the closing costs, am I correct that the buyer still has to come up with the extra money, yet mortgaged more than the agreed price?

Yes this is correct. If the closing costs are more than the concession, the buyer must pay the remaining money. It shouldn't be by too much though - when you get your good faith estimate, you should know pretty much what your closing costs will be.

Re: What is a sellers concession?

i never knew what that was either, thanks for sharing