With a 3% concession, a $350,000 mortgage would rise to $360,500 . So your monthly payments would go up by $55 a month (assuming a 30-yr fixed-rate mortgage at a 4.75% interest rate). You would also be paying $9,218 more in interest over the life of your loan.
What are typical seller concessions?
Seller concessions on an FHA loan or USDA loan are limited to up to 6% of the loan amount . For Fannie Mae or Freddie Mac conventional loans, the limit is based on your down payment. If you put down 10% or less, the limit is 3%. For down payments above 10% but below 25%, the limit is 6%.
What does 3 percent concessions mean?
If the seller concessions max out at 3%, the seller can contribute up to 3% of $150,000, or $4,500, to help with closing costs. Here are the seller concession limits for some common loans.
What is a $5000 concession?
Effects on Home Sales Costs
A concession means the seller will walk away with a little less cash at closing, and the buyer will not have to come up with as much cash. ... If the buyer offers you a $5,000 concession, you’ d only have to come up with the $27,500 down payment .
How do concessions work in real estate?
It works like this: The buyer (or the buyer’s agent) negotiates the concession amount with the seller or the seller’s agent . ... Concessions don’t give buyers cash back at closing, nor can they be used to cover the buyer’s down payment. They’re strictly intended to reduce what the buyer pays at closing.
Are seller concessions legal?
A seller’s concession is an amount of money paid toward closing on your behalf. ... In most cases, the seller’s concessions may look like a gift, but they’re really just a legal way to allow you to roll the closing costs of your transaction into your loan .
How much are closing costs for seller?
Seller closing costs: Closing costs for sellers can reach 8% to 10% of the sale price of the home . It’s higher than the buyer’s closing costs because the seller typically pays both the listing and buyer’s agent’s commission — around 6% of the sale in total.
Why should seller pay closing costs?
Seller concessions are closing costs that the seller agrees to pay and can substantially reduce the amount of cash you need to bring on closing day . Sellers can agree to help pay for things like property taxes, attorney fees, appraisal inspections and mortgage discount points to lower your interest rate.
Is it OK to ask seller to pay closing costs?
The truth is the type of market you’re in should play a big role in whether you ask for concessions or not. If you’re in a buyer’s market and you have the upper hand , asking for closing costs might not hurt your chances.
How do you ask for concessions?
- Don’t make the first concession on a major item. ...
- Don’t make a counter-offer to an unrealistic offer. ...
- One of the best times to get a concession is when you are asked for one. ...
- Make people work for their concessions. ...
- remember relative value.
Who pays closing costs buyer or seller?
Closing costs are paid according to the terms of the purchase contract made between the buyer and seller. Usually the buyer pays for most of the closing costs, but there are instances when the seller may have to pay some fees at closing too.
Can I lose my good faith deposit?
The good faith deposit promises the seller that the buyer plans to buy the house. ... In many cases, the buyer gets the money back if the purchase contract cancels. However, it is possible to lose the money .
How do I ask seller to cover closing costs?
You can ask the sellers to absorb five percent in closing costs (assuming your loan program allows this) instead of lowering their price by five percent. So if you make a full price offer, but with five percent in seller-paid closing costs, you get this: $10,000 down payment. No closing costs.
When should I ask for seller concessions?
- The property inspection reveals that significant repairs or improvements are needed in the home.
- The appraisal came back with a value lower than the contract price.
- The seller is having a difficult time selling the home.
What are concessions in renting?
A rental concession is a gesture made by a commercial property owner in order to entice a potential tenant to sign or renew a lease . ... Common examples include free or reduced rent, a tenant improvement allowance, or free parking.
How does a seller’s allowance work?
An allowance takes into account all or some of the upgrades needed to improve certain features ; the buyer is then offered a credit reflecting the expense. A listing may specifically say that the seller is offering an allowance for painting, flooring, decorating, or some other reason.
