There are strict mortgage guidelines for any seller related concessions. Seller’s concession is when the seller gives back a specific dollar amount or percentage of the purchase price to the buyer either towards buyer’s closing costs or inspection issues. The concessions can help lower the amount of money a buyer needs to bring to closing and in some cases help a buyer with all the closing costs. Seller’s concessions are typically financed over the life mortgage.
Mortgage companies put caps on the amount of seller concessions a buyer can receive and that depends on the type of loan the buyer is applying for.
If an FHA buyer has successfully negotiated a 6% seller concessions towards buyer’s closing costs and prepaids, you the seller may not be able to just “give a credit at closing” for any inspection issues. The dollar amount of the total credits may have already been reached therefore the seller must make the necessary repairs or adjust the purchase price which pending where the buyer is in obtaining a mortgage may not be easily achieved.
If you know you will have some items that may come up during a buyer inspection, it is important to tackle them prior to putting your home on the market. This will save you time and money and may save a buyer from having to walk away from the deal because they cannot secure mortgage.
Comments(3)