Seller concessions: what they really cost a seller

A seller concession is money the seller agrees to put toward the buyer's costs, paid out of the seller's proceeds at closing. The contract price stays the same. In August 2026, sellers gave one in 44.7% of US home sales, up from 42.6% a year earlier and the highest August share Redfin has recorded since at least 2020.

So the question most sellers now meet is not whether a concession will come up. It is what a given concession costs, and how it compares with simply lowering the price.

What a concession can pay for

Redfin counts a concession as any seller contribution that lowers the buyer's total cost of buying: money toward repairs, closing costs or a lower mortgage rate. A straight cut to the list price is not counted as one.

In practice the money usually lands on the buyer's side of the closing costs. Commonly covered items include:

• Lender fees, the appraisal, title charges and recording fees.
• Prepaid items the buyer owes at closing, such as homeowners insurance, property taxes and prepaid interest.
• Discount points, which buy a lower rate for the life of the loan. One point costs 1% of the loan amount.
• A temporary rate buydown, which lowers the buyer's payment for the first year or two only.
• A credit in place of a repair the inspection turned up.

Concession or price cut: the arithmetic

Take a $400,000 accepted offer. The buyer asks for $8,000. There are two common ways to write that.

• A concession: the price stays $400,000, and $8,000 comes off your proceeds as a credit to the buyer.
• A price cut: the price becomes $392,000, with no credit.

Before anything else comes off, both leave you $8,000 short of where you started. The difference is in the costs figured as a share of the price. If a commission is 5.5% of the price, the $392,000 sale carries $440 less commission. A percentage transfer tax shrinks the same way. So a price cut is usually a few hundred dollars cheaper for a seller than an equal concession.

Sellers and buyers pick a concession anyway for reasons on the buyer's side. It lowers the cash the buyer needs at closing, which a price cut of the same size barely does, since it only trims the down payment by a few percent of the cut. And the recorded sale price stays higher, which some sellers care about for the sake of the neighborhood's figures.

An $8,000 credit and an $8,000 price cut cost a seller almost the same. They cost the buyer's wallet on closing day very differently.

What a rate buydown costs

A temporary 2-1 buydown lowers the buyer's rate by two percentage points in year one and one point in year two. After that the loan returns to its full rate. The seller's cost is roughly the payment difference over those two years, set aside at closing.

A worked example, figured by us: on a $320,000 thirty-year loan at 6.75%, the monthly payment for principal and interest is about $2,076. At 4.75% it is about $1,669, and at 5.75% about $1,867. The two years of difference add up to about $7,400.

Discount points work differently. They lower the rate for the whole loan, and each point costs 1% of the loan amount, or $3,200 on that same loan. How much rate a point buys is set by the lender on the day.

The limits a loan puts on it

Every loan program caps how much a seller may put toward the buyer's costs. For a conventional loan sold to Fannie Mae, its Selling Guide sets the cap by how much of the home's value is borrowed:

• 3% when more than 90% is borrowed, which is under 10% down.
• 6% when 75.01% to 90% is borrowed.
• 9% when 75% or less is borrowed.
• 2% for an investment property, whatever is borrowed.

For an FHA loan, HUD's handbook allows interested parties up to 6% of the sales price toward the buyer's origination fees, closing costs, prepaid items and discount points. USDA loans are commonly cited at 6% too, and VA loans at 4% for concessions, with ordinary closing costs counted separately. We could not read those two agencies' own pages, so treat them as the published summaries' figures.

A lender may apply stricter limits than the agency, and the buyer's lender is the one who can say what a specific loan allows. A rate buydown counts toward the same cap, so money spent on the rate leaves less room for other costs.

Where it shows up at closing

A concession appears on the buyer's Closing Disclosure, either as one seller credit or as the specific costs the seller is paying. On your side it comes off the proceeds on the settlement statement, next to the commission, title charges and the loan payoff.

That makes it one more line in what a sale actually costs. Sellers weighing two offers where one asks for a credit often put both side by side as net figures, which is what comparing offers is for. The proceeds calculator shows the same line against your own price.

Why they are common right now

Redfin reports that 15.8% of homes sold in August 2026 had both a price drop and a concession, against 15.6% a year earlier. Its figures count homes that sold, not every listing. The national share hides wide local differences, and a concession is written into each contract separately.

What is a seller concession?

Money the seller agrees to pay toward the buyer's costs, such as closing costs, a rate buydown or repairs. It is paid from the seller's proceeds at closing, and the contract price stays the same.

Is a seller concession the same as a price reduction?

No. A price reduction lowers the contract price. A concession keeps the price and credits the buyer at closing. Redfin counts them separately, and they affect percentage-based costs such as commission a little differently.

Can a seller concession be paid to the buyer as cash?

Usually not. A concession offsets eligible costs of the purchase and the loan. A credit larger than those costs is commonly reduced or lost. The buyer's lender decides what counts.

How much can a seller contribute toward the buyer's costs?

It depends on the loan. Fannie Mae's Selling Guide allows 3% to 9% on a home the buyer will live in, depending on how much is borrowed, and 2% on an investment property. HUD allows up to 6% on an FHA loan. VA (4% for concessions) and USDA (6%) are commonly cited figures. The buyer's lender confirms the limit for a specific loan.

Where does a seller concession appear at closing?

On the buyer's Closing Disclosure as a seller credit or as specific seller-paid costs, and on the seller's settlement statement as a deduction from the proceeds.