Real Estate Term of the Day: Concessions

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 ( 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.

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