Whether you are buying or selling a home, it pays to know about concessions. Concessions, also called seller concessions, are allowances or reductions a seller makes to lower the financing costs for the buyer.
One conession a seller can make to a buyer is to cover some or all closing costs on the sale of the house. Closing costs can include loan processing fees, attorney's fees, transfer taxes, title insurance costs, inspection fees, and more, according to Mortgagecalculator.org, which notes that closing costs can amount to thousands of dollars. So, a concession on closing costs can mean the difference between a sale or no sale for a cash-strapped buyer.
Different states have different laws regarding real estate sales so it is important to have clear knowledge of the specific laws for the state where you plan on purchasing, adds Mortgagecalculator.org.
Concessions can bring benefits for the seller as well as for the buyer. Concessions can help sell a home faster, which can be critical if the seller is also in the process of trying to buy a new home.
It’s important to note, however, that there are limits on how much a seller may pay in concessions, typically between two and nine percent of the appraised value of the home, adds Mortgagecalulator.org. The exact amount is negotiated by your real estate agent and mortgage broker, and is decided by a combination of factors, one of which is the type of mortgage obtained by the buyer. Other factors include the amount of money borrowed and how the property or home will be occupied. A mortgage broker can tell the buyer the exact amount the seller will concede and should be able to give buyers a reasonable figure of the closing costs.
Always work with your real estate agent who can help you successfully navigate the buying, or selling, process.
Inland Real Estate Group : 201 E Veterans Parkway, Yorkville, IL 60560 : 630.553.3600