Paperwork Problems: Understanding Home Purchase Forms

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What Are "Concessions" and Should You Ask for Them?

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When you're purchasing a house, there's something known as a concession. A seller's concession is an important negotiating tool. Some sellers will offer concessions right off the bat, but you often need to send your real estate agent to negotiate on your behalf. Here's what you need to know.

What Is a Seller's Concession?

A concession is a stipend that the seller is offering you, contingent on the sale. The stipend is usually for something specific, like something that has to be done to the property before you're willing to purchase it or something that will generally improve the property. 

When you're purchasing a luxury home for sale, you probably have a lot of money tied up in the transaction. That makes the seller even more motivated to offer some concessions. A seller's concession usually is only available if they really want to accept your bid, because if they have a lot of offers, they don't need to entertain your requests.

What Can You Ask for in a Seller's Concession?

For the average home, a common seller's concession is a stipend for replacing all the appliances or replacing the carpet. Sometimes the seller's concession may be something specific like a $2,000 credit towards appliance purchase, giving the seller less to do, and the buyer more control.

If you're buying a luxury home, a few things you could ask for include:

  • A stipend towards the purchase of items for the home, such as new water features. If you ask for a $20,000 concession on a $650,000 home, your bank is going to pay out money to the seller, but the seller will give you cash at the end of the transaction.
  • A stipend towards new counters, floors, or anything else that needs to be repaired. Sometimes there may be damage to the house that you want to have repaired before you make a purchase. This is the time to negotiate for that.
  • A stipend towards closing costs. A buyer can negotiate that the seller pay their closing costs or things like property taxes or homeowner's insurance costs. Closing costs can be pretty substantial.
  • A stipend towards new appliances. If the appliances are too old or gone, you can request payments towards those new appliances.

Ask your real estate agent regarding common concessions in your area and if they think you have a chance of getting these concessions. It's a good way to negotiate some additional value in the transaction to you, without having to directly negotiate the purchase price.