Seller concessions come up in a lot of negotiations, especially when rates are high or an inspection turns something up. Done well, a concession can keep a deal together and cost you less than the alternative. Done carelessly, it can cost more than a price cut and even trip up the buyer’s loan. I won’t give you a typical amount, because there isn’t one that applies to every home. Here is how the pieces work.
Key takeaways
- A concession is money from you that pays the buyer’s costs, usually closing costs, prepaid items or a rate buydown.
- Loan programs cap it. For conventional loans, Fannie Mae limits these contributions to 3%, 6% or 9% depending on the down payment.
- It can’t pay the down payment, and anything over the cap generally has to come off the price.
- Compare it with a price cut by looking at your net and at how each affects the appraisal and future buyers.
What is a seller concession?
A seller concession, often called a seller credit, is an amount the seller agrees to pay toward the buyer’s costs at closing. In Colorado it’s written into the purchase contract or an amendment, and it shows up on the closing statement as a credit to the buyer from the seller.
Common uses include:
- Closing costs, such as lender fees, title charges paid by the buyer and recording fees.
- Prepaid items, such as the first year of homeowners insurance and money for the escrow account.
- A rate buydown, where the credit pays the lender to lower the buyer’s interest rate, either for the life of the loan or for the first few years.
- Repairs, where instead of fixing an inspection item, you credit the buyer so they can handle it after closing, if their lender allows it.
For the buyer-side line items a credit usually covers—lender fees, title charges the buyer pays, recording and prepaids—see closing costs for buyers in Colorado.
Loan program limits on concessions
The buyer’s loan program decides how big a credit can be. For conventional loans sold to Fannie Mae, the Selling Guide calls these “interested party contributions” and sets the maximum by the buyer’s loan-to-value ratio for a primary home or second home:
| Buyer’s loan-to-value | Down payment | Maximum contribution |
|---|---|---|
| Over 90% | Less than 10% | 3% |
| 75.01% to 90% | 10% to just under 25% | 6% |
| 75% or less | 25% or more | 9% |
The percentage is figured on the lower of the sale price or the appraised value. Contributions can pay closing costs and prepaid items, but not the down payment. Anything above the limit is treated as a sales concession, which means the lender reduces the price used for the loan by that amount. FHA, VA, USDA and jumbo loans have their own rules, and jumbo lenders set theirs individually. I always ask the buyer’s lender to confirm the limit before we agree to a number.
Source: Fannie Mae Selling Guide, B3-4.1-02, Interested Party Contributions. Checked November 2026.
How a concession affects your net
A credit comes straight out of your proceeds, just like a price reduction. The difference is how it shows up elsewhere:
- Appraisal: the home still has to appraise at the contract price. A higher price with a credit can make an appraisal gap more likely.
- Future comparables: recorded sale prices become comparables for the neighbors. Concessions are reported in the MLS, and appraisers adjust for them.
- Your taxes: concessions generally reduce the amount you realized on the sale. Ask your tax advisor how that applies to you.
My cost to sell a house in Colorado guide walks through the other costs that come out of your proceeds.
When a concession makes sense
I suggest sellers consider a credit when it solves a specific problem for less than the alternatives:
- The buyer is short on cash to close but qualifies easily for the payment.
- An inspection item would be awkward to fix before closing, and a credit lets the buyer use their own contractor.
- A rate buydown would lower the buyer’s payment more than the same amount off the price, which can widen your pool of buyers.
A straight price reduction can be better when a home has been sitting, when the appraisal is likely to be tight, or when you want the cleanest possible terms.
How I negotiate concessions
When a buyer asks for a credit, I look at the whole offer: price, earnest money, the loan type, the deadlines and the inspection terms. A credit with a stronger price and fewer contingencies can be the best offer on the table. I also make sure the contract states exactly what the credit can be used for and that it fits the buyer’s loan, so it doesn’t fall apart in underwriting. If the request follows an inspection, my what to fix before selling guide helps you decide between a repair and a credit.
