What Are Seller Concessions? A Way to Lower Closing Costs

Trying to save money on closing costs when buying a home? Seller concessions might be the solution. These strategic incentives can reduce out-of-pocket expenses and make homeownership more affordable.

At ALCOVA Mortgage, we help buyers navigate the process with confidence. One powerful strategy you can use—especially when funds are tight—is asking for seller concessions. Let’s explore what they are, why they matter, and how to use them to your advantage.

What Exactly Are Seller Concessions?

Seller concessions happen when the home seller agrees to cover certain buyer expenses as part of the deal. Instead of paying all the closing costs yourself, you shift some of that burden to the seller. These costs may include:

• Appraisal and inspection fees
• Title insurance
• Escrow or settlement fees
• Loan origination charges
• Prepaid homeowners insurance or property taxes
• Mortgage discount points (to lower your interest rate)

In short, seller concessions help buyers bring less cash to the closing table.

Why Would a Seller Agree to Pay?

Sellers don’t offer concessions out of generosity—they do it for strategic reasons. For example:

• In a buyer’s market, concessions help the home stand out from similar listings.
• If the home has lingered on the market, the seller may want to sweeten the deal to close faster.
• Some sellers use concessions to help a buyer qualify for financing, especially if the buyer lacks extra cash for closing costs.

In these cases, both sides benefit: you save money, and the seller secures a sale.

How Much Can a Seller Contribute?

The maximum allowed seller concessions depend on your loan type and down payment amount. Use this chart as a guide:

*USDA loans allow sellers to pay all reasonable and necessary closing costs, as long as they don’t exceed the actual expenses.

Let’s Break It Down with an Example

Imagine you’re buying a $300,000 home using a conventional loan with a 5% down payment. Based on loan guidelines, the seller can pay up to 3%—which equals $9,000—toward your closing costs.

That $9,000 could help you:

• Pay for the appraisal and title insurance
• Reduce your interest rate with discount points
• Cover some of your prepaid taxes or insurance

Because of this contribution, you bring less cash to closing—leaving more money in your savings or for home upgrades.

How to Negotiate Seller Concessions

You can’t assume a seller will offer concessions—you need to ask. Here’s how to approach it:

1. Work with a skilled real estate agent to determine if seller concessions are common in your market.
2. Talk with your ALCOVA Mortgage loan officer to learn how much you can request based on your loan program.
3. Include the concession amount in your purchase offer, and be ready to negotiate.

Keep in mind: in a competitive market, a request for large concessions could weaken your offer. That’s why a balanced approach—guided by experienced professionals—leads to better outcomes.

Final Thoughts

Seller concessions offer a smart way to reduce your upfront costs and stretch your homebuying budget. By using this strategy effectively, you can keep more money in your pocket and still get the keys to your dream home.

At ALCOVA Mortgage, we specialize in helping buyers understand and take full advantage of options like seller concessions. Whether you’re just starting your home search or preparing to make an offer, we’re here to guide you every step of the way.

Want to explore your loan options or negotiate seller concessions with confidence? Contact ALCOVA Mortgage today and let’s make it happen.