What Is a Seller Concession and Should I Offer One?

Why Buyers Ask for Concessions

Buying a home requires a significant amount of cash: down payment, closing costs, inspections, and moving expenses. Many buyers have enough for the down payment but are stretched thin on additional costs. Seller concessions help bridge that gap without requiring the buyer to come up with more money upfront.

Closing costs for buyers in Colorado typically run 2% to 3% of the purchase price. On a $700,000 home, that is $14,000 to $21,000. A buyer asking for $8,000 in concessions is asking you to cover roughly half of their closing costs.

How Concessions Are Structured

Concessions are typically expressed as a dollar amount or a percentage of the purchase price and included in the contract. They come directly out of the seller's proceeds at closing. The sale price stays the same on paper, but the net amount you receive decreases by the concession amount.

Note that lenders cap how much in concessions a buyer can receive based on loan type and down payment. For conventional loans, limits typically range from 2% to 9% depending on down payment size. FHA and VA loans have their own separate limits.

Should You Offer Concessions?

In a strong seller's market where you have multiple offers, there is rarely a reason to offer concessions proactively. Buyers competing for limited inventory accept the terms as written.

In a balanced or buyer-friendly market, offering a modest concession can attract more buyers and make your home accessible to a wider pool. If a buyer submits an offer that is otherwise strong but includes a concession request, evaluate the net price rather than the sticker price. A full-price offer with $8,000 in concessions is economically the same as an offer $8,000 below your asking price.

Concessions vs. Price Reductions

Sellers sometimes prefer granting a concession rather than reducing the sale price because a higher sale price strengthens the appraisal. If the appraiser sees that your home closed at $700,000, it supports values in the neighborhood. A sale at $692,000 with no concessions documents a lower price. Structuring deals with concessions rather than price cuts can serve the market data better over time.