For the past few years, it’s been mostly a seller’s market. But dynamics are shifting as the number of homes for sale grows. And that means that the market is balancing out a bit. As a result, some sellers are finding they need to be more flexible to close a deal. One strategy that can help? Offering concessions.
As the National Association of Realtors (NAR) explains:
“As home inventory begins to grow and buyers regain some advantage in the market, sellers may consider offering more in negotiations to make the deal more attractive and get to the closing table.” - Source: NAR
What Are Seller Concessions?
Concessions are homebuying costs that a seller agrees to cover as a way to get their house sold. Based on data from the National Association of Realtors (NAR), nearly 1 out of every 4 sellers (24%) offered a concession in 2024. Here are a few of the most common types of concessions:
1. Covering Closing Costs
The seller pays for part (or all) of the buyer’s closing costs, like appraisal fees, title insurance, or loan fees. This can help buyers who may be struggling to afford these upfront expenses.
2. Price Adjustments
Instead of making repairs, a seller might lower the purchase price to make up for updates the buyer will need to tackle. This can be especially useful if a home inspection uncovers issues the seller does not want to fix themselves.
3. Adding a Home Warranty
A seller may throw in a home warranty, giving the buyer peace of mind that key repairs will be covered in the first year. This can be an attractive perk, especially for first-time homebuyers unfamiliar with home maintenance costs.
And don’t worry—this doesn’t mean you have to come up with more cash to make it happen. These are things that get subtracted from your profits at closing – not more funds you have to bring to the table.
Not all concessions are about money. There are other extras you could throw in. For example, if your buyer is coming from an apartment and has never had a yard before, they may ask if you’d be willing to leave your lawn mower behind. That’s another lever you could pull to keep them happy.
How Concessions Help Sellers
Offering concessions can be a smart strategy for sellers to get a deal done. As Dennis Shirshikov, Professor of Finance and Economics at City University of New York/Queens College, told The Mortgage Reports:
"Pricing homes realistically and being willing to offer concessions, such as covering a portion of closing costs or including upgrades, will be key to closing deals . . . in a less frenzied market.”
For example, let’s say you accepted an offer from a buyer, but after their inspection, you found out there are some repairs they want you to tackle before you hand over the keys.
Rather than starting at square one and searching for a new buyer, you could offer a concession. One option is to take on the repairs and cover the costs yourself. But, if you really don’t want the hassle of dealing with contractors, you could reduce your price by however much repairs would cost. Alternatively, you could offer to pay a portion of your buyer’s closing expenses with the idea they’d use the money they saved at closing toward doing the repairs themselves.
Either way, a concession can be a great way to meet in the middle. However, it’s important to have an agent on your side to help with these negotiations.
The Changing Market and Concessions
Over the past few years, sellers have enjoyed an extremely competitive market where they held most of the power. However, as more homes enter the market, buyers now have more choices. This shift means sellers need to adapt their strategies to make their homes stand out.
Why the Market is Changing
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Increased Inventory
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With more homes available, buyers have greater choices and are no longer pressured to make quick decisions or engage in bidding wars. This shift means sellers must be more competitive in their pricing and incentives to attract buyers. A home that would have received multiple offers in a hot market may now sit longer, prompting sellers to offer concessions to close deals faster.
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Higher Interest Rates
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Rising mortgage rates have significantly impacted affordability, making it harder for buyers to qualify for loans or afford the same home they could a year ago. To counter this, many sellers are offering to cover closing costs or buy down interest rates to make their home more appealing to budget-conscious buyers.
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More Negotiation Power for Buyers
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As the market balances, buyers gain more leverage in negotiations. They are now in a position to ask for concessions, whether it's a price reduction, repair credits, or closing cost assistance. This trend marks a stark contrast to the competitive seller’s market of previous years, where buyers had to waive contingencies just to get their offers accepted.
How Concessions Keep You Competitive
In a shifting market, offering concessions can be the difference between your home sitting unsold for months or attracting serious buyers quickly. Here are some key advantages:
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Makes Your Home More Attractive – Buyers may be more likely to choose your home over another if you’re offering valuable perks like covering closing costs or including appliances.
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Helps Buyers Overcome Financial Barriers – Some buyers may struggle with upfront costs, and concessions can make homeownership more attainable.
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Encourages Stronger Offers – If buyers know they can receive certain concessions, they may be more willing to meet your asking price.
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Reduces the Risk of Deals Falling Through – Buyers are less likely to back out if they feel they’re getting a good deal with added incentives.
What to Consider Before Offering Concessions
Before deciding what concessions to offer, consider these factors:
1. Work With an Experienced Agent
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A skilled real estate agent can help you navigate concessions and ensure you don’t give away too much while still making your home attractive.
2. Understand Your Local Market
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Concessions are more common in buyer’s markets. If homes are selling quickly in your area, you may not need to offer incentives.
3. Know Your Bottom Line
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Determine in advance how much you’re willing to offer in concessions while still making a profitable sale.
4. Ensure Buyer Financing Allows Concessions
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Some loan types have limits on how much sellers can contribute toward buyer costs. FHA, VA, and conventional loans all have different rules, so be sure to check with your agent.
Final Thoughts
Seller concessions can be a powerful tool to attract buyers, close deals faster, and adapt to a shifting real estate market. If your home isn’t getting offers, being flexible with concessions might be the key to sealing the deal.
If you are thinking of selling your home, work with Denise, an experienced real estate agent to strategize concessions and get your house sold faster.
