What is a Seller’s Concession?
A seller’s concession is any amount of money paid toward the closing by the seller to the buyer. This money can be used toward closing costs, but sometimes a seller may agree to pay money if they have items in the home that need to be repaired or replaced, but they don’t want to actually perform the repairs.
How Much Can A Seller Contribute Toward The Purchase?
Depending on the type of loan product, the amount that a seller may be able to offer a buyer can vary. A conventional loan can allow for anywhere from 2% to 9% of the home’s purchase price in seller concessions. Conversely, home owners who have a VA or FHA loan, may allow for up to 6% of the purchase price as a seller’s concession.
Are there specific fees a seller can pay?
A seller can virtually pay any of the buyer’s settlement costs. However, sellers are not prohibited to contributing toward the down payment. This can be considered a gift and can get complicated or negate the closing of your loan. When a buyer asks for a seller’s concession, it may be a good idea to wait until you have the Good Faith Estimate in hand. Utilizing a Good Faith Estimate can make the best reference to actual closing costs. However, a buyer should always be prepared to bring some extra cash to the closing table in case of discrepancies.
If you are purchasing a home in New Jersey, you should consult with a real estate attorney. An experienced real estate attorney can guide you through the home buying process, straight to the closing table.
Joseph Gachko, Esq. is an experienced New Jersey attorney who can assist you in any of your estate or real estate-related legal matters. If you require legal counsel for your real estate matters, please contact The Law Office of Joseph Gachko today to set up a consultation.