What Are Concessions in Real Estate?
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 a seller agrees to credit toward the buyer's closing costs, discount points, or prepaid escrow. It is not a price cut. It gets written into the contract and capped by loan type: FHA holds it to 6%, conventional loans run 3% to 9% by down payment size, VA caps at 4%, USDA at 6%. Cash Flow Deals locks a seller's net price before any concession gets negotiated.
| Factor | Traditional Route | Cash Flow Deals |
|---|---|---|
| When concessions get negotiated | Often reopened after the buyer's inspection or when the loan underwriter flags an issue | Net price locked before repairs are even scoped, so there's nothing left to renegotiate late |
| Who decides the concession amount | Buyer's agent and lender guidelines, seller reacts after the fact | Terms set upfront as part of one negotiation, not a surprise days before closing |
| Paperwork trail | New addenda drafted close to closing, sometimes under deadline pressure | One agreed structure carried through to the closing statement |
What a Concession Actually Covers
A seller concession pays for things the buyer would otherwise owe at closing. Title insurance, transfer taxes, recording fees, prepaid property tax and insurance escrow, and mortgage discount points all qualify. What does not qualify: the buyer's down payment. No loan program lets a concession substitute for money the buyer has to bring to the table themselves. Lenders also cap concessions at the buyer's actual costs. If the negotiated credit is bigger than what the buyer owes at closing, the extra does not carry over to the buyer as cash. It just goes unused.
How Much a Seller Can Give, by Loan Type
Every loan program sets its own ceiling, based on the lower of the sale price or the appraised value. FHA loans cap concessions at 6% of that number, no matter the down payment. Conventional loans backed by Fannie Mae or Freddie Mac scale with how much the buyer puts down: under 10% down caps out at 3%, 10% to 24.99% down allows 6%, and 25% or more down allows up to 9%. VA loans cap concessions at 4%, though routine closing costs and market-rate discount points sit outside that cap. USDA loans allow up to 6%. Investment-property purchases are capped at 2% across the board.
Concessions vs. a Straight Price Cut
A price cut and a concession move money in different directions on paper, even when the seller nets the same amount either way. Cutting the sale price lowers the loan amount, the appraisal target, and the property tax basis in some counties. A concession keeps the sale price where it is and routes money through the closing statement instead. Buyers sometimes prefer concessions because a lower loan amount can also mean a smaller down payment requirement, since down payment is a percentage of the loan. Sellers sometimes prefer concessions because the listed sale price stays intact for comps in the neighborhood.
Where Concession Negotiations Usually Go Wrong
Most concession fights happen late, right after a home inspection turns up a repair item nobody priced in. The buyer asks for a credit to cover it, the seller feels ambushed, and both sides start negotiating against a closing deadline. That's a timing problem more than a money problem. Sellers who lock their net price and get repairs scoped before they're under contract do not run into this. There's nothing left to fight over once the number and the condition of the house are both settled upfront. Cash Flow Deals structures its process this way, agreeing on a net price before repairs are assessed.
Common questions
Can a seller refuse to offer any concessions?
Yes. Concessions are negotiated, not required. A seller can decline and let the buyer cover their own closing costs, though in a buyer's market that stance can cost the seller a deal.
Do concessions show up on the closing disclosure?
Yes. Any seller credit gets itemized on the closing disclosure both parties sign before closing, so there's a paper trail of exactly what was covered and how much.
Are seller concessions the same as a rebate to the buyer?
No. A rebate would hand the buyer cash directly. A concession only offsets costs the buyer already owes at closing, and any unused amount does not convert to cash in the buyer's pocket.
Do concessions affect how much the seller nets?
Yes. Every dollar credited as a concession is a dollar the seller does not keep from the sale, even though the sale price on paper stays the same.
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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.
See your selling options before you decide anything.