Understanding the buying and selling process of real estate can be a bit confusing….and add on top of everything the emotional element! When you find a home that you love – or receive an offer on a home you’re selling – looking at more than just the list price or offer price matters. There are terms, deadlines and concessions.
So what the heck are buyer concessions!? Concessions can make a big difference in how much cash you need at closing — and how your offer looks to the seller. Let’s break down what they are, how they work, and the pros and cons of different approaches so you can decide if they make sense for your home search.
What Are Concessions?
Concessions are costs the seller agrees to pay on your behalf at closing. Think of them as a way of shifting certain expenses off your plate. Instead of lowering the purchase price, concessions help reduce your out-of-pocket costs.
They can be used toward things like:
- Closing costs (lender fees, title company fees, escrow accounts)
- Prepaid items (property taxes, homeowners insurance, HOA dues)
- Mortgage rate buy-downs (in financed purchases)
- In some cases, post-closing credits for repairs or upgrades
If you’re paying cash, you can’t use concessions to buy down an interest rate, but you can still apply them to closing costs, taxes, or HOA fees — which means more money left in your pocket for moving expenses or improvements.
Strategy 1: Offer Closer to List Price + Ask for Concessions
Imagine a home listed at $500,000. You offer $495,000 but also ask the seller to cover $10,000 in concessions.
- Your benefit: You need less cash at closing.
- Seller’s net: They walk away with about $485,000 after concessions.
- Seller’s perception: The offer still feels close to asking price, which can be easier for them to accept.
Pros for you:
- Keeps more cash in your pocket.
- Higher contract price can help the appraisal if comps are strong.
- Seller feels better seeing a price near list, even with credits involved.
Cons to watch for:
- If the appraisal comes in low, concessions could be harder to keep in the deal.
- Some sellers simply prefer a clean price reduction.
Strategy 2: Go Lower on Price + Ask for Concessions
Now imagine you offer $490,000 with the same $10,000 in concessions.
- Your benefit: Still get help covering costs at closing.
- Seller’s net: About $480,000 — a steeper discount from asking.
- Seller’s perception: They may see this as a “double hit” (lower price and covering your costs).
Pros for you:
- More flexibility if the market favors buyers.
- You still reduce out-of-pocket expenses.
Cons to watch for:
- Feels less attractive to sellers, especially if they’re comparing offers.
- Could trigger stronger counteroffers or rejections.
- Greater risk of negotiations breaking down if multiple offers come in.
What’s the Best Approach?
There’s no one-size-fits-all answer. The right strategy depends on the property, the market, and your financial goals.
- If cash on hand is your biggest concern: Asking for concessions closer to list price may be your best move.
- If the market is slow and the seller is motivated: A lower offer with concessions could work.
- If competition is high: Keep your offer clean and closer to asking, with concessions that feel reasonable.
The Bottom Line
Concessions don’t change the home’s value — they just change who pays for what at closing. For you, the buyer, they can be a powerful way to preserve cash for moving costs, renovations, or just peace of mind.
When used strategically, concessions create a win-win: you lower your upfront expenses, and the seller still gets a contract price they can live with.
👉 Thinking about making an offer? Let’s talk strategy. Every seller, market, and buyer’s situation is different, and concessions might be the tool that makes your next purchase both affordable and successful.