what does concession means?
In real estate, a concession is a discount or benefit that a buyer or seller offers to the other party in an effort to close the deal. When you find a house that you want to buy, you will pay closing costs which range between 2-5% of the total cost of the house.
In some cases, a seller may agree to contribute to the closing costs to facilitate the sale of his/her property. This contribution will be the seller’s concession. The seller can offer to pay a fixed amount or a percentage of the closing costs. It all depends on the negotiations between the buyer and the seller.
A buyer can also offer concessions when he/she is really motivated. A motivated buyer can be anyone who wants the house and willing to pay as much as they can afford on the property. For example, a person whose lease is ending in a few days will want to close the deal as fast as possible. By doing so, they may offer to pay all closing costs and associated fees.
Concessions do not stop at closing costs. A seller of a house may offer to pay for moving expenses, painting expenses and other renovations, etc. to motivate buyers.
What are the concessions a seller can cover?
There are a lot of concessions that can be covered by the seller. The following are some of these concessions.
- Title Insurance
- Inspection fees
- Appraisal fees
- Loan origination fee
- Etc
Benefits of sellers’ and sellers’ concession
The seller’s concessions will help the buyer to pay less money for the house. This way the seller will have money left over to cover other expenses such as repair and other renovations.
The buyer’s concessions, on the other hand, will put more money into the pocket of the seller. A motivated buyer could offer more money on the property and pay all closing costs. This is when selling a house really makes sense.
