How do Seller Concessions work?

[concerned1977]

What is the name of your state (only U.S. law)? VA

When you ask for seller concessions are you basically offering the seller more money for the house, but the "extra money" is basically the closing costs that the seller has to pay at closing?

For example there is a house I want to buy going for say $150k - I would offer $156,000 and ask for 4% seller concession. At closing the seller receives his/her asking price of $150k and he/she pays the closing costs with the $6,000 from the 4% seller concessions?

Also, can seller concessions be used for to pay for all of the buyers closing costs or are there limitations/restrictions on what it can be used for (i.e. is it ok to use it for tax service, title service, government taxes / filing fees, etc.)?

Thanks for your help.

 

[concerned1977]

Does anyone have any experience dealing with the seller concessions?

 

[CLJM]

Concerned1977,

I have experience as a Realtor for many years, including in the state of Virginia. Seller "concessions" are, just more or less, anything that is "conceded"---and, can be a concession by either the buyer or seller----it's just part of the negotiations. As a buyer of a home, offer and present your contract based on what you want---and then negotiate from there.
Given your scenario of a house listed at 150K..... I could surely see you offering less, and also asking for a specific amount for the sellers to pay for your closing costs. In Virginia, I do know it is quite prevalent (and sometimes, even expected that the buyer will ask the seller to pay some or all of the closing costs, prepaids may not always be included)
Are you working with a Realtor----your own "Buyers Agent ?
If so, he/she will help you with the process of offering a credible but good deal for you as the buyer.
Keep in mind....by just raising the sellers asking price, you are in effect, requiring the sellers to pay more---commissions, some closing fees, etc. are based on the sales price. You should be aware that many agents---both buying and selling, may encourage the higher sales price, as they will be paid based on that higher price. For my buyers, I have always found it better for them to negotiate concessions within the contract, independent of the sales price. The sales price should be a "fair" one, and not a "manipulated" one. Basically the negotiations will include negotiating the sales price itself, as well as any "concessions".
Also.... the "inflated" price may be too high for the appraisal, and then you'd have a lender problem.

I hope I have been helpful

 

[concerned1977]

Thanks CLjM

Thank you for the helpful information.