Understanding Seller Concessions

A Conversation with Christine Nothnagle, President of Nothnagle Home Securities Corp., and Brian Donovan, Associate Broker at Nothnagle Realtors

Christine: One of the biggest challenges buyers encounter when purchasing a home is having enough savings for the down payment, closing costs and upfront escrows. Today, many purchase offers are written with the seller contributing some of their equity over to the buyer at the closing to help them meet cash requirements for closing.
This is referred to as seller concessions. Commonly, you may find purchase offers written with the seller contributing from 3% to 6% of the purchase price towards the buyer’s closing costs. The allowable percentage of contributions depends on what type of financing the buyer has selected. Each mortgage program has its own requirements.
Many sellers today understand that it is very common practice to accept a purchase offer with seller concessions. A high percentage of purchase offers are written with seller contributions. When reviewing the seller’s options, your real estate agent will address your final proceeds upon closing.

Brian: The benefit that the buyer reaps from the seller concessions is a home that may not be otherwise possible at that point and time. Also, if the seller contributes to the sales process, it will create a bigger buyer demand for their home. When demand rises and supply remains the same, the result is a higher price!
The seller is not interested in the sale price as much as the net dollar proceeds they will receive from that sales transaction. The seller con-cessions become an additional dollar investment by the seller to achieve the market’s highest and best price for the seller’s benefit.
The result is a win – win for both buyer and seller. The buyer’s dream of the home has been achieved, and the seller’s goal for a timely sale has been reached.

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