Seller's Concession Question
My broker mentioned using a seller’s concession to cover closing costs. I’m still trying to wrap my head around something-does this mean the buyer get reimbursed, in cash, the closing costs? (After the new purchase price adding closing costs.) The higher mortgage amount still works for me. Has anyone done this and how was the…
My broker mentioned using a seller’s concession to cover closing costs. I’m still trying to wrap my head around something-does this mean the buyer get reimbursed, in cash, the closing costs? (After the new purchase price adding closing costs.) The higher mortgage amount still works for me. Has anyone done this and how was the experience? Thanks!
I did this. It was very straightforward. My escrow company drew up papers on how much I needed to bring to the closing, and then subtracted closing costs (up to 6%) from the up front cash amount. It’s not a cash refund, in that you never pay for that amount to begin with.
I used the cash to finance part of our renovation. It was easier to get concessions out of the seller than another loan for construction.
seller’s concession can not exceed the closing costs. Depending on the bank and or program allowable seller’s concession range from 3%-6%.
annie- you can fold closing costs into a loan on a refi but I they are never folded into the loan on a purchase unless you have a seller’s concession and they are not exactly folded into the loan. The seller pays for them outright usually but not always as a result of a higher purchase price.
Hi, I am a mortgage banker, so I’ll try to explain properly. A real sellers concession is when the seller concedes up to 6% of the sales price to contribute towards the borrowers closing costs. It is illegal for the borrower to get cash back according to any mortgage commitment. so if the borrower is tight with money, you can raise the purchase price (as long as everyone agree’s and the property appraises for the new purchase price)and the money goes towards closing costs. this is a very helpful tool in NY when closing costs are so high. Good luck and congrats on your contract
You can certainly negotiate cash back from the seller at closing or any other creative way of essentially reducing the price and making cash more accessible.
but I’ve done mortgages before, and they usually fold the closing costs into the mortgage anyhow. I don’t see how this is any different…
We got a seller’s concession – although we haven’t closed yet, as far as I can tell, it just means that the seller agrees that in the paperwork the purchase price is adjusted higher to accommodate the closing costs so that this amount is the basis for the mortgage loan amount. I don’t think anyone gets cash reimbursement, it is intended to lessen the amount of cash you have to come up with at closing.