Real Estate Term of the Day: Concessions
CONCESSIONS (aka: Seller Concessions) – reduction in price (could be credit for closing costs), or other benefit provided to a buyer as an inducement to buy (Barron’s Dictionary of Real Estate Terms)
Requests for seller concessions in the form of closing costs are a common negotiating point between buyers and sellers in our current market. If a buyer is financing a home, there are limits as to how much concessions can be given to the buyer from the seller. For an FHA loan the current limit is 6% of the sales price, while most conventional loans have a limit of 3%.
Buyer closing costs are commonly used to pay for:
- Fees associated with the loan (origination, lender title insurance, flood certification, appraisal & credit reports)
- Mortgage insurance
- Property surveys
- Hazard insurance escrow
- Tax escrow
- Recording fees
- Title company fees
- HOA working capital amount
- HOA prepaid dues
If you have any mortgage questions feel free to call Tonnie Gillen (303-996-8821 direct or via email (firstname.lastname@example.org) with Pinnacle Mortgage Group. Tonnie is a local lender that I have worked with over the past several years and highly recommend. She has a proven track record with me of great service and highly competitive rates.