What about Concessions?Dec 21, 2022
Hi there, my name is Emma Shelton, I am a Realtor® in the Phoenix area of Arizona and today I'm going to be talking about Concessions. This is something that has been coming up recently as we are in a shifting market.
So over the past two years pretty much right after Covid, we went into a very strong seller's market and what that meant is homes were selling very quickly they were selling sometimes even before they were fully on the market they were selling for a lot more than the list price, they were selling for more than the appraised price. Buyers were waiving inspections, waving appraisals, waiving financing contingencies, and doing anything that they could to get into the home so obviously, this didn't leave buyers with very much room to negotiate and get anything for themselves so as we've been in a shifting Market over the past few months, we're seeing more and more of buyers asking for concessions from the sellers. Now a lot of my first time home buyers or people that have bought just in the past couple years are not familiar with this term concessions, so what concessions are, it's actually going to be in your offer that you'll put in you can ask for concessions in two different ways: you can ask for a dollar amount, or you can ask for a percentage, of the sales price and this will come out of the seller's proceeds and it can be applied to your closing costs. You can also do a buy down with your lender if you're doing a loan you can ask basically you get a credit from the seller. This can be super helpful if you don't have a ton of cash you've been saving and saving and maybe you only have that three and a half percent down for your down payment but you don't have enough money to pay for the closing costs. Concessions are a great way to be able to get into Home Ownership when you don't have a lot of cash and now that we are shifting into a buyer's market you actually have the opportunity to ask for that. When you're asking for concessions, sellers will often want you to come in above their list price or come in a little bit higher to make up for those concessions because they will still get the profit but then they're able to give you a little bit of chunk of money and you can pay for your closing costs or to buy down your rate as the rates continue to rise. This is a great option for people. I've seen people get into Home Ownership that couldn't have otherwise because of concessions and buyers are actually having the opportunity to ask for it and sellers are saying yes to concessions. So talk to your realtor about concessions and options for you and you can also talk to your lender about how much you will need for your closing costs you can actually get an estimate from this. Your realtor should be able to pull that for you as well from the title company and normally we're seeing depending on the price point we're usually seeing about two to three percent of the sales price is what you're going to pay in closing costs and your closing cost costs are going to include escrow fees, taxes, HOA fees, the lender fees, loan origination fees, things like that so it does all add up and the concessions can be a great way that you can actually get these paid and not have to bring cash from out of your pocket or out of your savings account or wait longer so that you can save up that cash so you may have a little bit of a higher loan amount, but that's really going to just be dollars every month so it is a great option if you have any questions about concessions and what you should ask for, leave us a comment below or if there's any other topics that you want to talk about that you've heard and you're not sure what they mean, make sure to give us a thumbs up, subscribe, and don't forget to hit the Bell, so you don't miss any of our future videos thank you.