A portion of the home's closing costs paid by the seller as part of the purchase agreement, reducing the buyer's cash needed at closing.
Full Definition
Seller concessions (also called seller-paid closing costs) occur when the seller agrees to cover some or all of the buyer's closing costs, typically in exchange for the buyer paying close to or above asking price. The seller pays the buyer's specified costs at closing — reducing the cash the buyer needs to bring. Concessions are subject to limits: conventional loans cap concessions at 2–9% of purchase price depending on LTV; FHA caps them at 6%; VA at 4%. Sellers may prefer concessions over a price reduction because the home's recorded sale price stays higher (important for neighborhood comps). Concessions are more common in slower markets where sellers are motivated.
Related Terms
Whether you're buying a home or building a mortgage career, Lend Loft has the tools, training, and licensed support to get you there.