Seller Concessions: The strategy that moves deals
Stagnant listings could be challenging for sellers, while lower mortgage payments could feel out of reach for buyers. But what if there was a simple strategy that created a win-win for everyone involved? Enter the power of seller concessions.
A seller concession is a closing cost the seller agrees to pay for the buyer. While it seems like a straightforward deal, the real value lies in how you use it.
The game changer: Rate buydowns1
While concessions could help with closing costs, the most powerful option is a rate buydown. Instead of lowering the home's price which devalues the house, a seller could pay a fee to temporarily or permanently reduce the buyer's interest rate.
This small investment creates a massive benefit:
- For Buyers: A lower interest rate translates to a significantly lower monthly mortgage payment, making homeownership more affordable and increasing their buying power.
- For Sellers: Gets the home sold faster and at full price, while offering an incentive that buyers truly value.
What seller concessions could cover
Apart from rate buydowns, seller concessions could cover a variety of costs associated with a home sale. These contributions are typically used to help the buyer with out-of-pocket expenses.
Some of the most common fees that could be covered by a seller concession include:
- Appraisal fees
- Title search fees
- Loan origination fees
- Inspection fees
- Homeowner association fees
- Real estate taxes
- Lender fees
The competitive edge: for builders and agents
For real estate professionals, offering rate buydowns as a seller concession is their new competitive advantage.
- For Builders: Partner with Guaranteed Rate Affinity’s Builder Specialists and advertise below-market interest rates on spec homes with Lock ‘N’ Sell2 or forward commitments3. This is a powerful selling point that attracts more qualified buyers and accelerates sales.
- For Agents: Help clients find more affordable homes and be seen as a trusted expert who brings creative solutions to the closing table. This helps agents close more deals and grow their brand.
The takeaway
Seller concessions are more than just a negotiation tool; they're a strategic way to make homeownership a reality for more buyers, while also benefiting the seller, agent, and builder.
To learn more about how seller concessions could help you, connect with a Loan Officer today.
1 - Both temporary and permanent RateReduce options are available from participating builders and sellers on select properties. Buyer paid RateReduce options are also available for qualified borrowers on any approvable property per loan product restrictions.
2 - The Lock N' Sell is allowed up to 120 days. Builder must contribute a minimum of 3% in builder-paid discount points to be eligible. Eligible for 30 year, fixed rate loan options. Borrower must be under contract and have submitted their application to Guaranteed Rate Affinity no later than 15 days prior to lock expiration date. If the loan does not close during the initial lock period, or if the lock period expires, the borrower may incur additional fees. Restrictions apply.
3 - Guaranteed Rate Affinity’s Forward Commitment program allows builders to pay an upfront fee to secure a block(s) of funds at/or below market rates during a lock period up to 180 days. The upfront fee is typically 50% of the points to which the builder is committing. Separate blocks are required for different loan types. Forward Commitments are available for high balance loans in certain markets. If any portion of the Forward Commitment is intended for investment properties all points are due upfront. Temporary buydowns may be combined with Forward Commitments, but the costs will remain separate. Payment plans are not available. Talk to a Rate loan officer for more information about securing a Forward Commitment for your buyers. Eligible borrowers must be under contract and have submitted their application to Guaranteed Rate Affinity’s no later than 15 days prior to lock expiration. Applicants are subject to credit and underwriting approval. Restrictions apply.