Seller concessions
Seller concessions and your closing costs.
You are buying a Utah home and the cash you need at closing is tight. A seller concession lets the seller cover part of your closing costs, written right into the contract. Here is how it works, the limits every loan sets on it, and when it beats simply asking for a lower price.
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The short answer
What a seller concession actually is.
A seller concession is simple once you strip the jargon off it. It is the seller agreeing, in writing in the purchase contract, to pay part of your closing costs as the buyer. You will also hear it called seller-paid closing costs or a seller credit, and they all point at the same thing: money the seller applies toward what you would otherwise owe at the closing table. It does not go in your pocket, and it is not a discount on the house. It is a credit aimed straight at your costs.
Buyers ask for one for a plain reason. Closing costs are due in cash on closing day, on top of your down payment, and a concession frees up that cash instead of shrinking the price. Picture two ways to save the same amount. The seller drops the price, or the seller keeps the price and credits you that amount toward your costs. The price cut lowers what you finance. The concession leaves more money in your bank account the day you get the keys, which for a lot of buyers is the thing that actually stands between them and closing. The rest of this page is how a concession gets written, the two hard limits every one of them runs into, and how to tell which move is better on your numbers.
How it gets written
A concession, from offer to closing.
A concession is not a side deal or a handshake. It is a term in the purchase contract, and it travels through the loan like any other number. Here is the path it takes.
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You ask for it in the offer
When you write the offer on a Utah home, you name a seller credit toward your closing costs as one of the terms, usually a set dollar amount. It is negotiated the same way price is, and it is one of the terms a good agent puts to work in a strong Utah offer.
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The seller weighs it against price
To the seller, a credit toward your costs comes out of their proceeds, so they read it much like a price reduction. A clean offer with a modest credit can beat a lower price with more strings attached, which is exactly why a concession gets negotiated rather than assumed.
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Your lender checks it against the rules
Once it is in the contract, your lender confirms the credit fits inside two limits: the ceiling your loan program allows, and your own closing costs. Anything that does not fit has to be reworked before it can count. This is the step people skip, and it is the one that decides whether the credit survives.
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It lands on the Closing Disclosure
In the final numbers, the credit shows up as a seller credit on your Closing Disclosure, the standard federal form that lays out every dollar at closing. You see exactly how much the seller is covering and what you still bring, right alongside your other closing costs. Set up right, the credit simply lowers the cash you need to close.
The two hard limits
Two limits every concession runs into.
The first limit is a ceiling. Every loan program puts a cap on how much an interested party, the seller included, can put toward your costs, and that ceiling is not one fixed number. It moves with the type of loan you are using, with how much you are putting down, and with whether you will live in the home or rent it out. A buyer putting less down is generally held to a tighter ceiling than one putting more down, and the rules differ again across conventional, FHA, VA, and USDA loans. I am keeping actual figures off this page on purpose, because the right number is the one that applies to your specific loan, and a percentage pulled from an article is exactly how a credit gets written too high and then bounced in underwriting. Your lender can tell you your real ceiling in about a minute.
The second limit is a firm rule about how the money can be used, and it catches people off guard. A concession can never be larger than your actual closing costs. It pays costs, and only costs. If the seller agrees to credit you more than you actually owe at closing, you do not pocket the difference as cash, and you cannot roll it into your down payment. The extra simply falls out of the deal, or the price has to be reworked so the numbers still hold. There is no version where a generous seller credit turns into a check handed to you at the table.
One more piece ties both limits together: the price still has to appraise. A concession usually rides along inside the agreed price rather than beside it, so if you and the seller build a credit into a higher number, the home has to appraise for that higher number or the deal has to adjust. On some loans the ceiling itself is measured against the appraised value, so a low appraisal can quietly shrink the credit you thought you had. That is the whole reason the appraisal and the concession get talked about in the same breath.
Concession or price cut
A credit versus a lower price.
Saving you the same amount two ways is not the same deal. A concession keeps your cash for closing; a price cut lowers what you borrow. Which one wins depends on what is tight for you, and for the seller both land in nearly the same place on their net sheet.
| What changes | A seller concession | A lower price |
|---|---|---|
| Your cash at closing | Freed up; the seller covers part of your costs | Unchanged; you still owe every cost |
| What you finance | The full agreed price | A lower price |
| Your loan balance | Slightly higher | Lower |
| The appraisal | Must support the price the credit rides inside | A lower price is easier to support |
| For the seller | Comes out of proceeds, much like a discount | Comes out of proceeds, much like a discount |
| Best when | Cash to close is what is tight | You have the cash and want the smallest balance |
Plan the concession with me
One person who reads the loan and the contract.
Here is the part a guide cannot do. Whether a concession helps you comes down to your loan and your cash, and getting the number right in the offer is where the deal is won or lost.
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Twenty years living in Southern Utah. I have helped buyers close across Iron and Washington counties in every kind of market, and I know how sellers here read a credit against a straight price cut.
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Agent and lender, one picture. I am licensed in both, so I can size the credit your loan allows and write it into the offer as one move, taking one role on your purchase and never both at once.
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The caps, without the guesswork. I will tell you the credit your loan actually allows for your price and your down payment, so the offer is written to fit the first time instead of coming back from underwriting.
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Statewide, told straight. In Southern Utah I am your agent or your lender, one or the other. Anywhere else in Utah, I connect you with a partner agent I trust and stay involved.
Questions, answered
What buyers ask about seller concessions.
A seller concession is the seller agreeing, in the purchase contract, to pay part of your closing costs as the buyer. You will also hear it called seller-paid closing costs or a seller credit. It is applied toward what you owe at closing, not handed to you as cash and not a cut to the sale price, so it lowers the money you need to bring on closing day.
Closing costs are due in cash at closing, on top of your down payment, so a concession frees up that cash rather than shrinking the price. A price cut lowers what you finance, while a concession leaves more money in your account the day you close. Which one helps more depends on whether cash to close or your loan balance is the tighter constraint for you.
Yes. Every loan program caps how much an interested party like the seller can contribute, and that ceiling shifts with the loan type, with how much you put down, and with whether you will live in the home. There is also a firm rule that a concession can never be more than your actual closing costs. Your lender can give you the exact ceiling for your loan.
No. A concession pays your closing costs and nothing else. If the seller credits more than you actually owe at closing, you do not pocket the difference and you cannot move it into your down payment. The extra either comes off the deal or the price gets reworked, so a concession is never a way to walk away from the table with cash.
It can. A concession usually rides inside the agreed price, so if a credit is built into a higher number, the home still has to appraise for that number or the deal has to adjust. On some loans the allowable credit is even measured against the appraised value, which means a low appraisal can shrink the credit you counted on. The price always has to stand up to the appraisal.
It appears as a seller credit on your Closing Disclosure, the standard federal form that lists every dollar at closing. You will see how much the seller is putting toward your costs and what you still owe. Set up correctly, the credit simply lowers the cash you need to bring, and it is all confirmed on that form a few days before you sign.
Keep exploring
Ready to size your concession?
I am Scott Buehler, a licensed real estate agent and mortgage lender in Cedar City, and I have written concessions into offers across Southern Utah from both chairs. Tell me your price, your loan, and the cash you have for closing, and I will tell you the credit your loan actually allows and whether it beats a lower price on your numbers. No pressure, and no obligation.
Not in Southern Utah? I will connect you with a partner agent I trust in your area, and stay involved.