Education and news for smart DIY landlords!
Everyone wants to buy something at a discount. Even in real estate, we just can’t make any purchases without haggling with the seller first. But in most case scenarios, no seller would agree to sell their house for less than the appraisal or their listed price.
So what other options can a buyer take to lower their spending? They can still ask for a seller to make concessions. To understand more about what seller concessions are, how they work, what fees they usually cover, the pros and cons, and the right way to ask for a concession, keep on reading.
Seller concessions are compromises that a home seller can agree with a buyer in terms of covering closing fees. Sometimes the seller pays in full, other times they pay just a percentage, and there are also scenarios where a homebuyer can ask the seller to pay for specific fees.
For example, when buying a home, a real estate attorney must be present during the closing phase. This will make sure that the interests of both parties are protected and all legal documents have no problematic omissions.
But hiring an attorney would add to your closing costs as a buyer. You can either ask the seller to chip in or totally cover this specific cost instead to reduce the total money you spend in buying a home.
There are a lot of closing costs a seller concession can cover. They include:
As mentioned, you could reduce your overall costs for buying a home if the seller agrees to cover some of the closing fees.
If you’re a seller and state on your property listing that you’re open to making concessions, this can attract a lot of buyers with good deals. And concessions are also useful especially if your home has been sitting on a listing site for a long time.
Most sellers want to get the most money out of their sales and they can only do that by sticking to their plans. That includes not agreeing to give you any discounts.
If they do agree to a concession, most will just increase their home’s selling price. As a buyer, you never got a discount, just a technical loophole with no advantages whatsoever.
A seller might ignore your offer or inquiry especially if they have other potential buyers that don’t initiate a concession deal.
You can expect the seller to make counter offers or concessions and this could delay your homebuying efforts. And all in all, you’ll end up in an exchange of deals that would result in the loss of patience for both parties.
A concession may not help you in the long term compared to just paying upfront on a regular deal. Once you roll a seller’s concession into your loan, your balance increases. You’ll also pay for a higher downpayment that you’ve actually saved.
Know the seller really well, the property’s listing condition, and what kind of real estate market the property is in. This way, you can present a deal that a seller won’t think too much about accepting and is also fair for both of you.
Remember to limit your demands as well. Sellers are more inclined to take deals that aren’t too complicated.
The best way to ask for a concession is with the help of a seasoned real estate agent. That’s because they know the market well and the best deals to offer while still being able to protect your buying interests. Don’t attempt to ask for concessions if you’re a newbie in buying homes as your offers will end up being rejected or ignored.
Knowledge is paramount in real estate. Arm yourself with it by reading these articles!