It’s common for an interested buyer to request concessions when negotiating a deal. These concessions may come at a financial cost to you, but it may be in your best interest to agree to the buyer’s terms under some circumstances.
What Types of Concessions Can a Buyer Ask for?
Many people, especially first-time homebuyers, struggle to come up with enough money to cover both a down payment and closing costs. A buyer may ask you to cover some or all of the closing costs.
If, for example, the buyer requests $5,000 in closing cost assistance, you will add $5,000 to the sale price and put that amount toward the buyer’s closing costs. That will allow the buyer to take out a larger mortgage and spread the additional cost over the life of the loan rather than paying a lump sum at closing.
A potential buyer may also ask you to make a concession if an inspection uncovers serious problems. For instance, the roof may need to be fixed. You may be unable to pay for repairs, or you may want to focus on making a down payment on your next home. The buyer may ask you to lower the sale price to account for the cost of roof repairs, plus the inconvenience to the buyer.
Perhaps you and the buyer agreed on a price, but the appraisal came back below that figure. This can present a challenge for a buyer who needs to take out a mortgage to buy the house. In that case, the buyer may ask you to reduce the price so that he or she can qualify for a loan.
Should You Agree?
If a buyer requests help with closing costs, you may agree if you want to close the deal quickly, or you may decline if you have received another offer or if the house was only recently listed and you’re not in a hurry to sell. If the house has been on the market for a while or you want to move soon, you may be better off agreeing to the buyer’s request.
If the house needs major work that you can’t or don’t want to pay for, it may be in your best interest to lower the price. Otherwise, the buyer may walk away, and you may struggle to find another interested buyer.
If your home appraised for less than the agreed-upon price, the buyer may be unable to get a mortgage unless you agree to reduce the price. If you don’t, the deal may fall through. You may find another buyer, but that person may run into the same problem.
Your decision will depend on the buyer’s request, your individual circumstances and the local housing market. If it’s a seller’s market, you may feel less pressure to agree to concessions than you would in a buyer’s market. Ask your real estate agent for advice.