Seller Concessions Explained
Published by Cash Flow Deals · Last updated 2026-08-04 · Published and reviewed for compliance by Camilo Palacio, a Florida Licensed Realtor
A seller concession is money the seller credits the buyer at closing, usually for closing costs, prepaid items, or a rate buydown. Each loan type caps the amount: FHA allows up to 6%, VA caps most concessions at 4%, conventional loans allow 3% to 9% by down payment size. Sellers working with Cash Flow Deals get their net price locked before repairs are scoped, so a concession negotiated later doesn't reopen that number.
| Factor | Traditional Route | Cash Flow Deals |
|---|---|---|
| When repairs and credits get negotiated | Often after inspection, which can reopen the agreed price through a concession or credit request | Net price is locked before repairs are scoped, so later findings don't erode the number |
| How much control the seller has over the final net | Net proceeds can shift as concessions, repair credits, and buydown requests stack up during negotiation | Net price is fixed upfront as a separate line item on the closing statement, not a moving target |
| Who negotiates the concession amount | Buyer's agent and seller's agent negotiate back and forth against the loan program's cap | Not applicable in the same way, since the net price is already agreed before that negotiation would normally happen |
What a Seller Concession Actually Pays For
A seller concession is a credit the seller agrees to give the buyer at closing, and it typically covers the buyer's closing costs, prepaid taxes and insurance, or a temporary or permanent rate buydown that lowers the buyer's monthly payment. Sometimes a concession replaces a repair: instead of the seller fixing something found during inspection, the seller credits cash toward the cost and the buyer handles the repair after closing. Either way, the money comes out of the seller's proceeds, it doesn't appear as a lower sale price on the contract.
How Much a Seller Can Legally Concede, By Loan Type
Each loan program sets its own cap on seller concessions, and going over it can jeopardize the buyer's financing. FHA loans generally allow up to 6% of the sale price in seller concessions. VA loans cap concessions at 4% of the property's established value, though normal closing costs the seller agrees to pay don't count toward that 4% limit. Conventional loans are tiered by loan-to-value: buyers putting down less than 10% are typically capped around 3%, with the allowed percentage rising as the down payment grows, up to around 9% on loans with a lower loan-to-value ratio. These caps come from the loan program, not from the seller, so a buyer's lender is the final word on what's allowed for a specific deal.
Why Buyers Ask for Concessions More Than They Used To
The 2024 NAR Sitzer/Burnett settlement, effective August 17, 2024, made real estate commissions negotiable and moved buyer-agent compensation off the MLS. Since a listing no longer automatically advertises what the seller will pay a buyer's agent, some buyers now fold their own agent's compensation into a concession request as part of the purchase offer instead of assuming it's covered separately. That's added a new line item to what concessions are being asked to cover in many contracts, on top of the traditional closing-cost and repair-credit requests.
Concessions vs. Just Lowering the Price
A concession and a lower sale price can net out to roughly the same number for the seller, but they're not interchangeable. A lower recorded sale price affects the appraisal comps for every other home in the neighborhood, which matters to other sellers and to lenders down the line. A concession keeps the recorded sale price higher while still reducing what the seller actually walks away with, since the credit comes off the top at closing. This is exactly the kind of moving-target math that a locked net price avoids: with Cash Flow Deals, the seller's net is agreed before repairs are scoped, so a later concession or credit conversation doesn't change what the seller was already promised.
What Happens If a Seller Says No
Declining a concession request doesn't automatically kill a deal. The buyer may proceed anyway, ask their lender about other options like a larger down payment or a different rate structure, or the two sides may renegotiate a smaller credit or a different repair arrangement instead. What happens next depends on which side has more room to walk away, how the local market is moving, and whether the buyer has other financing paths available.
Common questions
Do seller concessions come out of the seller's proceeds?
Yes. A concession is a credit applied at closing, and it reduces what the seller actually receives even though the recorded sale price stays the same. It's not a separate expense billed to anyone else.
Can a buyer ask for more in concessions than their loan program allows?
They can ask, but the lender will cap what's actually usable at closing based on the loan type's limit. Anything requested above that cap generally can't be applied to the loan and would need to be restructured or dropped.
Do seller concessions change the sale price that gets reported to the county?
No. The recorded sale price stays what was agreed in the contract. The concession is a separate credit line on the closing statement, not a price reduction, which is part of why concessions and price cuts affect market comps differently.
Are seller concessions the same thing as a home warranty?
No. A concession is a cash credit applied at closing that the buyer can direct toward allowed costs. A home warranty is a service contract covering specific repairs after move-in. Sellers sometimes offer both, but they're separate tools that solve different problems for the buyer.
Can seller concessions come up on a sale that doesn't involve a mortgage?
Concession caps exist specifically because loan programs set them, so they matter most when the buyer is financing the purchase. A seller can still offer a credit or discount in any transaction, but the strict percentage caps tied to FHA, VA, or conventional guidelines only apply when a buyer's loan program is involved.
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What this means for your options
Every path to selling a house has real tradeoffs. Cash Flow Deals is built for the middle: faster than a traditional listing, more money than a cash investor.
Wait and see
Keep the property as-is and hope conditions improve. The mortgage, insurance, and upkeep keep costing money while you wait, with no set date for things to turn around.
List with a traditional agent
Standard MLS listing, typically 5-6% in commission, and a financed buyer whose deal depends on appraisal, inspection, and lender approval — any of which can fall through after weeks on market.
Sell to Cash Flow Deals
No repairs, no showings, no financing contingency on your side — our novation structure connects you with a bank-financed buyer at a price locked at signing. Usually within one business day.
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