How Seller Concessions Work
Dan Ardis explains how seller concessions work in a home purchase and how buyers can use them to reduce closing costs.
Key Points from This Video
- Seller concessions let the seller pay your closing costs at closing
- FHA caps at 6%, conventional varies by down payment, VA allows 4%
- On a $400k Bakersfield home, 2-3% concessions equals $8,000-$12,000 back at closing
- Useful in buyer's markets or with motivated sellers
Video Transcript
Seller concessions: what they are and how to actually use them.
A seller concession is when the seller agrees to pay a portion of your closing costs at closing. It's not a price reduction. The purchase price stays the same, but the seller credits you money at closing to cover loan fees, title, escrow, and other costs.
Why would a seller do that? Because in a buyer's market or with a motivated seller, it's an alternative to dropping the price. They keep their number on paper but net less. You pay a slightly higher purchase price but get cash back at closing to cover your out-of-pocket costs.
In Bakersfield right now, asking for 2-3% seller concessions on certain properties is realistic. On a $400,000 home, that's $8,000-$12,000 toward your closing costs.
The limits depend on your loan type: FHA caps seller concessions at 6%, conventional varies by down payment, VA allows 4% plus reasonable closing costs.
Call me before you make an offer and I'll tell you what's realistic to ask for on your specific deal.
Dan Ardis is a Bakersfield-based mortgage broker with 20+ years in the industry, including experience as a Senior Specialty Underwriter. He originates residential and commercial loans for Kern County clients and in 49 states through Barrett Financial Group.
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Questions After Watching?
Dan answers mortgage questions for Bakersfield buyers and investors. Call (661) 342-9381 or get pre-approved online.