Should Home Buyers Ask for Seller Concession in a Seller’s Market?

Thanks for the excellent and timely subject to share. The comments from others was also useful for me as a Mortgage lender.

Beth

Asking for concessions in our seller's market is an uphill battle unless you offer a comparable amount over asking. Even then, with multiple offers, I think the chances of acceptance are pretty slim. Congrats on the feature.

Jeff

Sellers are often hesitant to go with the "raise the price- allow seller concessions" scenareo for appraisal reasons. Even if the property is worth the increased contract price, there is always the potential of a "bad" (overly conservative) appraisal.

Beth,

Congratulations on your well deserved star for this post.  What you suggesting is a wonderful way to work with the concept of seller concession.  Wishing you a super wonderful weekend. 
A

Hi Beth Atalay. This is a very common occurrence in our local market, especially on the lower end of the pricing spectrum. We find that you still can get concessions to work, but to do so the seller needs to feel like they still "won". I realize that sounds bad when you read it, but it is a true statement. Some of the previous suggestions of offering enough over the asking price to cover the concessions and then some is a good route to take, but as you pointed out, there is the appraisal issue to overcome. There is no "one size fits all" answer for this situation. 

They can ask, but they need to be prepared for the possibility of rejection. Buyers need to listen to their agent's advice regarding the market, instead of listening to everyone else.

Back when I was an agent we often had to ask sellers to chip in on closing costs. We increased the offer by that much, but then the sellers - once they understood the concept - were concerned about being expected to pay a commission on those extra dollars. We had to write it so the commision was calculated on the price before the addition of closing costs.

Hi Beth, So many of the entry level buyers need some help from the seller in order to buy a home. Even though our market heavily favors sellers, my clients have success when asking for 1-1.5% in seller concessions. Often, the seller will agree. If the seller counters saying they won’t pay the concessions, my clients counter the counter adding the amount of the concession to their offer. Although we are sometimes outbid, this strategy works most of the time. For many, it’s the difference between becoming a homeowner or not.

So many factors to discuss with buyers and sellers when faced with this scenario. As you stated Beth, our advice and strategy is all dependent on the hyper local market at the time of offering. Great advice and explanation for buyers and sellers...and agents who haven’t had this experience. Thanks!

Great timing for this blog.  Sellers rule the market and can be selective when receiving multiple offers.  Knowing the market is key when writing an offer for a buyer who needs closing cost assistance.  It's key to use an experienced agent who knows how to structure an offer!   Great post!

In my market Sellers do not want to hear any contingencies and they get even annoyed when the buyer wants to make sure that they can deliver it with a Clear Title:))Endre

It's rare to do seller concessions in our market and it is usually associated with affordable housing.  Since there are typically multiple offers on low priced homes in our area, the buyers usually go for the cash offer.  It all really depends on your market. 

Good morning Beth Atalay,

I'm glad to see your post featured! Its a great question and I've seen some good answers. I agree with Michael Jacobs "it's important to know/ understand your local real estate market. Something that is considered "normal" or "customary"  in an area can be mis-interpreted in another."

Hi Beth... there are ways to get seller concessions in a seller's market... the buyer just has to make it worthwhile for the seller. Each situation will be unique. It's just that in a seller's market buyers shouldn't consider seller concessions "a given."

Beth, this is a great informational post.

Buyers need to understand the market before they start asking for concessions.

With a financed deal, will the property appraise for the amount of their offer?

How much do they really want the house?

Are they prepared for a quick rejection of their offer?

This is why it is imperative for buyers to secure the services of a real estate agent that knows the market and how to present offers. Then they should heed the advice of the agent.

Thanks for a great post.

This is a tough question, especially for those first time buyers.  They usually have enough for a DP and a few moving expenses--not all the escrow $$.

When you represent the buyer, you need to be able to give the very best advice and information to your client.  They look to us to assist them.  If they need closing costs, we need to make sure that they are able to get the best terms available in the market.  And try to do our best to make sure that they get the house that they want.  Great post.

I think its a win win for both parties. If the seller has a certain "net" amount they have to take home....that number should always be met. Help the buyer out by increasing the purchase price to cover costs. 

Buyer is happy because it keeps money in their pocket...seller is happy because they get their net and sell their home for more! I think this should be taken into consideration on every contract. 

Make everyone happy!!!

Find out what the seller wants and needs and give them what is important to THEM! You're so right, it absolutely CAN be worked out - you just have to know what is important to the sellers and go above and beyond with that to get your buyers' concessions! It's a great give-and-take!

Wonderful post, Beth! Happy Thursday!

Yes! Buyer's Agents should carefully counsel their buyers about asking sellers to pay closing costs and/or other concessions in a sellers market. It can make the difference of WINNING the bid and LOSING the house. You did a great job of explaining how to structure a winning offer.