What Is A Seller Contribution?

Why This Question is Coming Up Now

With mortgage rates still sitting around 7% and affordability tighter than it’s been in years, I’ve been hearing this question a lot:

What’s a seller contribution and how does it work? 

It came up again last week with a buyer trying to keep their monthly payment in check without having to lower their offer.

And the truth is, this tactic can be a win-win if you know how to use it right.

Breaking Down Seller Contributions

A seller contribution, also called a seller concession, is when the seller agrees to cover part of the buyer’s closing costs.

Here’s how it usually works:

• Instead of negotiating a lower purchase price, the buyer offers full price (or close to it) with the condition that the seller pays, say, $8,000 toward closing costs.

• That money can be used to cover lender fees, title costs, or even to buy down the interest rate, a big deal in today’s rate environment.

• It reduces the cash the buyer needs to bring to closing, which can make a deal happen faster, especially for first-time or cash-strapped buyers.

A quick example:

If a home is listed at $525,000, the buyer might offer $530,000 with $10K back from the seller to cover closing.

The seller still nets $520,000 after concessions and the buyer brings less cash to closing.

It’s all about flexibility.

What I’d Tell a Friend

If you’re buying right now, don’t sleep on this strategy. '

Instead of grinding the price down another $10K, you might get farther by asking the seller to cover closing costs or buy down your rate.

On the flip side, sellers should be open to this too, especially if it helps close a strong offer without having to slash the price.

Want to know if this would work in your situation?

Let’s talk.

There’s more room for creative deals right now than people realize.