As a home seller, offering concessions can be an effective strategy to attract potential buyers and close deals faster. But is it the right approach for your property? Here’s a guide for NCJAR members to help you navigate seller concessions and advise your clients with confidence.
What Are Seller Concessions?
Seller concessions are when a seller agrees to pay certain costs associated with purchasing a home on behalf of the buyer. These concessions can make your property more appealing by reducing upfront expenses for buyers, particularly those with limited cash reserves. In many cases, offering concessions can lead to faster or better offers, as they allow buyers to stretch their budget further.
Examples of Seller Concessions
Sellers have several options when it comes to concessions. Common examples include:
- Covering closing costs, such as loan origination fees or title searches
- Paying for home inspections or repairs required to close the sale
- Covering homeowners' association fees or real estate taxes
- Paying for appraisal fees or agent services
These concessions can help reduce the financial burden on the buyer and streamline the process.
How Do Seller Concessions Work?
Seller concessions can either be advertised upfront or negotiated as part of the purchase agreement. Typically, the concession is written into the contract as a specific dollar amount. It’s important to note that concessions aren’t binding until they are documented in a signed contract.
Seller Concessions vs. Offers of Compensation
A common point of confusion is the difference between seller concessions and offers of compensation. While seller concessions cover a variety of fees or costs for the buyer, offers of compensation specifically refer to the seller compensating a buyer’s agent for bringing in a buyer who successfully closes on the home. This distinction is important for both sellers and REALTORS® to understand.
How to Advertise Seller Concessions
Concessions can be advertised publicly, shared on the MLS, or discussed during negotiations. However, not all MLS platforms allow concessions to be listed in detail. Some MLS systems may only let sellers indicate whether or not concessions are being offered with a simple “yes” or “no.” If advertised on the MLS, the total value of the concessions must be included, and they cannot be tied to the use of a buyer’s agent.
Are There Limits to Seller Concessions?
Yes. The total value of seller concessions is typically capped based on the buyer's lender and state law. However, any payments offered to cover a buyer’s broker fee are excluded from these limits and must be made off-MLS. It’s essential to consult with your REALTOR® to understand these limitations.
Making the Right Choice
When you work with an NCJAR REALTOR®, you’re partnering with a real estate professional who is bound by the REALTOR® Code of Ethics. Your REALTOR® will guide you through the process, help you weigh your options, and develop a strategy that aligns with your goals. They will protect and promote your best interests at every step of the transaction.
Remember, practices vary based on state and local laws, so always consult with your REALTOR® or a legal professional for guidance on specific regulations in your area.
