One of the most frequent things I get asked is how seller concessions work. I find myself answering that questions almost every day. A seller concession is allowed on almost all loan products but at different amounts. FHA loans allow the highest at 6% of the sales price. VA loans allow seller concessions up to 4% and conventional loans offer up to 3%.
A seller concession occurs when a seller agrees to give back to the purchaser an agreed amount up to or below the limit for the borrowers loan type. The incentive for the seller comes in as it tends to speed up the home selling process and gives the buyers an added benefit. If you are considering seller concessions it is best to ask right away, and to get it in writing. Many people do not have enough money to put down a down payment on a house and then pay all of the closing costs so this offers a little leeway and ability for the buyer to put a larger d own payment down which indicates a lower interest rate over the long term.
Concessions can be used for closing cost or pre paid items such as taxes or up front interest ie points, tax prorations or escrow account set up's.
The borrower still has to come to closing with the minimum contribution but everything else could be covered with a seller concession. We are based in Southfield MI, with other strong focuses in: Macomb Township, Clinton Township, Chesterfield Township, Harrison Township, and St. Clair Shores, but do work throughout the state of Michigan.
Call us or one of our qualified realtor refferal partners and find out how to get in your dream home with very little out of pocket! (248) 663-3130