If you’re buying a home in North Idaho right now, there’s one thing I want you to know about before you write an offer: seller concessions. It’s money you can ask the seller to put toward your costs, and in today’s market it’s one of the most common things I ask for.
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What are seller concessions?
Seller concessions (you’ll also hear “seller credits” or “seller-paid closing costs”) are money the seller agrees to pay toward the buyer’s costs of buying the home. You ask for them in your offer, the seller agrees, counters, or says no, and whatever you agree on gets written into the purchase contract.
The money doesn’t come to you as a check. It’s credited at closing and shows up on your closing disclosure, lowering the cash you need to bring to the table.
Here’s a simple example. Say you’re buying a $350,000 home in Kellogg and your offer asks the seller to contribute $8,000 toward your closing costs. If the seller agrees, that $8,000 gets applied at closing, and you bring that much less cash.
What can seller concessions be used for?
This is where they get useful. Common uses include:
Closing costs. This is the big one. Lender fees, title and escrow fees, appraisal, recording fees, and prepaid items like property taxes and homeowner’s insurance can add up fast. Concessions can cover a good chunk of that.
Buying down your interest rate. You can use concessions to pay for discount points, which lower your interest rate. That can be a permanent buydown for the life of the loan, or a temporary one (like a 2-1 buydown) that lowers your payment for the first year or two. With rates where they are, this is often the best use of the money, because a lower rate saves you something every single month. Your lender can run the numbers both ways so you can compare.
A home warranty. A one-year home warranty can help cover repairs on things like the furnace, water heater, or appliances after you move in. Asking the seller to cover it is a pretty easy request.
Repairs. Say the inspection turns up a roof that needs work or a furnace near the end of its life. You can ask for seller concessions to be put toward those repairs. Whether that’s allowed, and how much, is up to your lender, and there are limitations on it, so always verify with your lender before we write it into the offer.
Do sellers actually agree to this?
A lot of the time, yes. In the market we’re in right now across North Idaho, from Coeur d’Alene to the Silver Valley, asking for seller concessions is a really normal part of an offer. Plenty of sellers would rather help with your costs than drop their list price.
I write seller concessions into a lot of my buyers’ offers. Not every seller says yes, and it depends on the house, how long it’s been on the market, and what else is in your offer. But it’s worth asking about, and it doesn’t come across as a lowball the way some buyers worry it will.
One thing to keep in mind is that the home still has to appraise. If you ask for concessions and bump your offer price to make up for it, the appraisal needs to support that price. We’ll talk through that before we write anything.
How much can you ask for?
There are limits, and they depend on your loan type. Here’s a general overview:
Conventional loans: Up to 3% of the price if you’re putting less than 10% down, 6% with 10–25% down, and 9% with more than 25% down. (Investment properties are usually capped at 2%.)
FHA loans: Up to 6%.
VA loans: Up to 4% in concessions, and on top of that the seller can pay your normal closing costs, which don’t count toward that 4%.
USDA loans: Up to 6%.
A couple of important notes:
Concessions can’t be more than your actual allowable costs. If your closing costs and prepaids come to $7,000, you can’t use $10,000 in concessions. Extra money doesn’t come back to you as cash.
These limits are a general guide. Lenders and loan programs can have their own rules, and guidelines change. Always confirm with your lender before we write the offer so we ask for the right amount.
Getting your lender involved early helps. Once I know your loan type and estimated closing costs, we can figure out what number makes sense to ask for.
Thinking about buying a home in North Idaho?
Whether you’re looking in Coeur d’Alene, Kellogg, or anywhere in the Silver Valley, I’m happy to walk you through how seller concessions could work on your purchase and what’s realistic to ask for on a specific house.
Call or text me at 208-784-7099, or email sarah@northidahobound.com.
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This post is general information, not lending or legal advice. Loan guidelines change, so check with your lender about your situation.