To cover the costs of getting the mortgage, you pay a fee known as “closing costs” when buying a house for sale in San Antonio, Texas. They range from about 2 to 5% of the home price. There are cases where you may be able to get the seller to pay for some of the closing costs. They are known as seller concessions. Seller concessions can be a powerful way of saving a few bucks on closing costs. So, before you close on your mortgage, research well on how you can use the seller concessions to your advantage.

What is Seller Concessions?

The closing cost that the seller has agreed to pay is known as the seller’s concession. Sometimes, you can ask the seller to pay for certain closing costs. Otherwise, the seller may simply give a percentage of the total closing costs.

What are the costs covered by Seller Concessions?

• Loan origination fees – These fees will cover the lender’s charges for processing the loan.
• Title Insurance – This insurance protects you and your lender if somebody comes forward with a claim for the home’s title.
• Property Taxes – Property taxes can be paid through the end of the year during the closing time.
• Appraisal fee – This covers the cost of getting the third-party appraisal of the house to determine its market value.
• Recording fees – This fee covers the cost of documenting the home’s purchase with your local government.
• Inspection fees – It covers the costs of inspections that are required for the loan.
• Attorney Fees – In some states, you will require an attorney to review your closing documents. Attorney’s fees cover the cost of realtor’s services.

Once you have applied for the loan, your lender will give you a loan estimate, which will show all the estimated closing costs. You can then work with your San Antonio realtor and decide which ones the seller should pay for.

Advantages and Disadvantages of Seller Concessions:

• Advantages:

Seller Concessions allows you to pay less money at the closing. Thus it makes your home-buying more affordable. As a buyer, you will usually have to bring a few thousand dollars for the closing costs and your down payment. With the help of Seller Concessions, you can significantly cut down on these costs. So, you don’t have to empty your savings to purchase a house.

Agreeing to the concessions can be good for the seller in some situations. It helps the seller to get his home off the market faster. If he is eager to close on the sale, he will be willing to pay part of the buyer’s closing costs to speed up the process.

• Disadvantages:

One of the drawbacks of seller concession is that it can make you a less appealing buyer. The sellers are mostly looking for offers with no strings attached. If a home has multiple offers, the seller is likely to discard the offers that will include seller concession requests. Instead, it is better to put in a lower offer for the house and cover the closing costs yourself. This option is generally easier for the seller and can increase the chances of your offer being accepted.

Negotiating on seller concessions:

You certainly want to ask for a concession. But how will you convince your seller to do so? It is all about proper negotiation and current housing market standards.

Firstly, you need to figure out whether you are in the buyer’s market or the seller’s market. This will influence your ability to negotiate for seller concessions. If their house has been sitting on the market for a long time, sellers are willing to offer concessions.

If you wish to ask for concessions, you must limit your other demands. The least complicated offers are easily agreed upon by the sellers. If you feel that certain repairs are an absolute must for you, then you must cover that costs yourself.

Working with San Antonio Realtor will be a wise thing to do if you want to ask for concessions. They can research the local sales and provide complete information on the area’s housing market.  They can also show you other properties that can be closed with concessions. If the real estate agent will feel that you are in the seller’s market, they can help you decide whether you should ask for seller concession or put a low offer.

Seller Concession Limits and Loan Type

The restrictions on seller concession vary according to the loan type. If the sale price is lesser, then it can dictate how much your seller will pay in concessions.

Here are the seller concession limits for some of the common loans:

• Conventional Loans:

The limit of conventional depends on how much you are putting down.

If your down payment is less than 10%, then seller concession will be up to 3%

If your down payment is 10 – 25%, then seller concession will be up to 6%

If you plan on purchasing an investment property, then the seller concession is 2%, no matter how much amount down payment you put. 

• FHA Loans:

The seller can contribute to 6% for all the FHA Loans.

• USDA Loans:

For USDA Loans, the seller contributes up to 6% of the buyer’s loan amount. This is one loan type in which the seller concessions are not based on the home price or its appraised value.

• VA Loans:

For VA Loans, the seller can contribute up to 4%. For VA loans, the seller concessions can include payment of the buyer’s judgments, debts, and VA funding fees.

• The bottom line:

Seller concessions are the closing costs that the seller has agreed to pay. They help in making the home more affordable for the buyers and help the seller to close the deal faster.

Speak to your San Antonio realtor to decide whether you have a good opportunity to ask for seller concessions. If the market is right, things can work in your favor and you can ask the seller to pay for your closing costs. You just have to make sure that whatever you are asking is within the limits dictated by the type of loan you are getting.