Should You Offer Seller Concessions When Selling Your Salt Lake County Home?

Should you offer seller concessions when selling your Salt Lake County home? Sometimes, yes. A concession, where you pay part of the buyer's closing costs or a rate buydown, can bring in more offers and keep a deal together. It can also cost you more than a price cut would. The right answer depends on your home, the buyers shopping in your price range, and what the money does to your net.

Charisse Walker is a real estate agent with Chalker Properties Group in Salt Lake and Davis County, Utah, and a licensed mortgage lender. I look at concessions from both sides of the table. That means I can tell you what a buyer's lender will allow and what each option does to the check you take home.

A seller concession is money you agree to put toward the buyer's costs at closing. It comes out of your proceeds. Common ones include:

• Paying part of the buyer's closing costs, like lender fees, title fees or prepaid taxes and insurance.
• Paying for a rate buydown, which lowers the buyer's interest rate for a set time or for the whole loan.
• A credit in place of a repair, often after the inspection.
• Covering an HOA transfer fee or a home warranty for the buyer.

In Utah, these terms are written into the Real Estate Purchase Contract or an addendum, so the amount and what it covers are spelled out before closing.

Concessions tend to help in a few situations:

• Your buyers are stretching on cash. Many first-time buyers can afford the payment but have little left after the down payment. Help with closing costs can be what lets them buy.
• Interest rates are the buyer's main worry. Dollar for dollar, a buydown usually lowers the payment more than the same amount off the price.
• Showings are steady but offers are not coming. Buyers like the home but hesitate. A concession mentioned in the listing can give them a reason to write.
• The inspection turned up something. A credit lets the buyer handle the repair after closing, and you avoid scheduling contractors while you pack.

Salt Lake County has a lot of condos, townhomes and smaller single-family homes where buyers watch every dollar of cash to close. In those segments, a closing cost offer can be what gets a buyer to schedule a showing.

For your net, a dollar of concession and a dollar off the price cost you about the same. The difference is in what the buyer gets.

Here is an example with round numbers, not a real listing. Say you list at $500,000. One buyer offers $500,000 and asks for $10,000 toward closing costs. Another offers $490,000 with no help. Your proceeds land close to the same in both cases.

So why would a buyer pick the first version? A $10,000 price cut only lowers their down payment by a small slice of that amount. A $10,000 credit lowers their cash at closing by the full $10,000. For a buyer with a thin savings account, that is a big difference.

The two versions are not identical for you. Fees tied to the sale price, such as commission and the owner's title policy, are figured on the higher number, so the concession version can cost you slightly more. A seller net sheet shows the gap in dollars.

Watch the appraisal too. The home still has to appraise at the contract price. If the price was raised to make room for a concession, a low appraisal can undo the plan.

Yes. Each loan type caps what a seller can contribute, usually as a percentage of the price, and the cap can change with the buyer's down payment. A credit also cannot be larger than the buyer's allowable costs. The buyer cannot walk away from closing with cash.

The buyer's lender confirms the exact limit. If a buyer asks for more than their loan allows, the extra goes unused. Check the number before you agree to it, and write the credit as "up to" an amount so anything unused stays with you.

1. Start with your net. Ask for a net sheet that shows your proceeds at a few price and concession combinations.
2. Look at who is buying in your price range. Your agent can see in the MLS whether recent buyers of similar homes used FHA, VA or conventional loans, and whether concessions were common.
3. Decide whether to advertise it. A line in the listing offering help with closing costs can bring in buyers who shop by monthly payment. Holding it back gives you room to negotiate later.
4. Compare every offer on net. A $505,000 offer with $15,000 in concessions puts less in your pocket than a $495,000 offer with none.
5. Put a cap in writing. "Up to" language protects you if the buyer's costs come in lower.
6. Plan for the inspection. If you already gave a concession, decide ahead of time how much more, if any, you will give on repairs.

• Raising the price to make room for the concession. This only works if the home appraises at the higher price.
• Agreeing to a flat amount. If the buyer's costs come in lower, a flat credit can leave money on the table. "Up to" keeps it with you.
• Giving twice. A concession up front and then a large repair credit after inspection adds up fast. Keep a running total.
• Using a concession to cover a pricing problem. If the home is priced above recent sales, a credit will not close that gap for an appraiser. Check your price first with a home valuation.
• Forgetting fees tied to price. Commission and title costs follow the sale price, so compare offers on your final net.

Here is a typical example, not a specific client. A seller in Salt Lake City has a two-bedroom townhome. It has had steady showings for three weeks but no offers. Feedback says buyers like it but are worried about cash to close.

The seller holds the price and adds a line to the listing offering up to a set amount toward the buyer's closing costs or a rate buydown. The next week, a first-time buyer with a low down payment loan writes an offer near list and uses the credit to lower their rate. The seller's net is close to what a price cut would have produced, and the home sells to a buyer who could not have bought it otherwise.

Other times, a price cut is the better move. If showings have dried up, the problem is usually price, and a concession will not fix that. For more on selling in the city, see the Salt Lake City area page.

Charisse Walker is a real estate agent with Chalker Properties Group in Salt Lake and Davis County, Utah, and a licensed mortgage lender. Because I am also a licensed lender, I can tell you what the buyer's loan allows and run your net at each option before you sign anything.

The goal is the same every time: the most money in your pocket with the fewest surprises between contract and closing. See how we approach selling your home.

Do concessions show up in the sale price?

Do seller concessions show up in the sale price? The sale price is the contract price. The concession is recorded in the MLS as a separate number, so agents and appraisers can see both.

Can I offer concessions after we are under contract?

Can you offer concessions after you are under contract? Yes, through an addendum, often after the inspection or appraisal. The buyer's lender has to approve the change before closing.

Will offering concessions make buyers think something is wrong with the home?

Will concessions make buyers suspicious? Most buyers read closing cost help as help with cash, not a warning sign, especially when the listing says what the credit is for.

Should I offer concessions in the listing or wait for the buyer to ask?

Should you advertise concessions or wait? Advertising brings in payment-focused buyers. Waiting keeps room to negotiate. Your showing feedback tells you which one fits.

What is the difference between a concession and a repair credit?

What is the difference between a concession and a repair credit? A repair credit is a kind of concession tied to a specific item the inspection found. It counts toward the same lender limit.

If you are deciding between a price cut and a concession, or you want to know what buyers in your price range need, send me your address. I will pull the recent sales and build a net sheet with both options side by side. Contact Charisse here.