Buying a home is an exciting adventure, but the price tag can be daunting, especially if it’s your first rodeo. Fortunately, there are ways that can help alleviate some of the financial burden, and they’re called seller concessions.
Let’s delve into what seller concessions are and explore six common examples to give you a better understanding of how they can work to your advantage.
What are seller concessions?
Seller concessions, also known as seller contributions, are part of a negotiation strategy in some real estate transactions. In essence, the seller agrees to cover certain costs associated with the property purchase in order to close the deal, providing the buyer with an additional financial incentive.
What are some examples of seller concessions that could make a significant difference in your homebuying experience?
Origination Fee. The origination fee is what the buyer pays to their lender for processing the loan application. It’s essentially the cost of getting your mortgage up and running. With a seller concession covering this fee, you can focus on settling into your new home without stressing over initial processing expenses.
Discount Points. Buyers often have the option to pay discount points up front to lower the interest rate on their mortgage. Seller concessions can help by absorbing some or all of these costs, making it more feasible for you to secure a lower interest rate and potentially save thousands over the life of your loan. *Restrictions and limitations apply.
Recording Fees. When the sale of a home is completed, there are fees associated with documenting the transaction with the local government. Seller concessions can help remove some of all of these fees from your plate, allowing you to redirect your funds toward settling into your new abode.
Appraisal Fee. Determining the market value of the property is a crucial step in the homebuying process, and it comes with a price. With a seller concession, you may find relief in having the seller contribute to covering this expense, giving you a clearer picture of your overall financial commitment at less or no cost to you.
Inspection Fee. Buyers often opt for a home inspection to ensure the property is in good condition. The inspection fee, however, is an additional cost. Seller concessions can be negotiated to include coverage for the inspection fee, giving you more peace of mind about the integrity of your new home.
Title Insurance. Protecting your investment is paramount. Title insurance provides coverage for both the buyer and the lender in case a third party makes a claim on the home’s title. With seller concessions, you can potentially have the seller contribute to this protective measure that cements your confidence in your property ownership.
As you can see, seller concessions can be a game-changer in your homebuying journey, offering possibilities for additional financial relief and flexibility. As you embark on this exciting venture, don’t shy away from exploring these concessions with your agent and the seller. Some well-negotiated seller contributions could pave the way for a smoother and more affordable path to homeownership, and your local Homeowners Licensed Mortgage Professional is here to help with that too. Happy house hunting!
