Seller Concessions Are Back: What Arizona Buyers Should Ask For
Seller Concessions Are Back: What Arizona Buyers Should Ask For
Seller Concessions Are Back: What Arizona Buyers Should Ask For
Why Would a Seller Give a Buyer Money?
Should We Ask for a Price Reduction or Seller Concessions?
Seller Concessions Are Back: What Arizona Buyers Should Ask For
For a while, buyers were lucky if a seller accepted their offer.
Asking the seller to pay for anything?
Good luck.
But markets change.
And in parts of the Arizona market, we're seeing something buyers
haven't had much of in recent years:
Negotiating room.
Homes are sitting longer. Some sellers have already reduced their
price. Builders are competing with resale homes. And depending on the
property, sellers may be willing to contribute money to get a deal
done.
That's where seller concessions come in.
But before you automatically ask for the biggest concession possible,
I want to know something:
What do you need that money to accomplish?
Because there are several ways we may be able to structure the deal.
And they don't all affect your wallet the same way.
What Are Seller Concessions?
Seller concessions are funds the seller agrees to contribute toward
certain buyer costs as part of the transaction.
Depending on your loan program and the terms of the transaction, those
funds may be used toward eligible expenses such as:
Closing costs.
Certain prepaid expenses.
Discount points.
Or a mortgage rate buydown.
There are rules and limits around how much a seller can contribute and
what those funds can be used for, which is why I want your lender
involved before we decide what to ask for.
But from the real estate side, seller concessions can give us another
tool at the negotiating table.
Why Would a Seller Give a Buyer Money?
Because sometimes it helps sell the house.
That's the simple answer.
If a home has been sitting on the market for 70 days, the seller may
be looking at a very different situation than someone who listed
yesterday and already has three offers.
Maybe they've already moved.
Maybe they're carrying two homes.
Maybe they've had several showings but no offers.
Maybe they need to close by a certain date.
Or maybe the house is competing against a builder offering buyers
thousands of dollars in incentives.
That doesn't mean every seller is going to hand us a giant concession.
But it means I'm going to look for where we have leverage.
Should We Ask for a Price Reduction or Seller Concessions?
This is where it gets interesting.
Let's say we believe there's $15,000 of negotiating room in a house.
Do we ask the seller to reduce the purchase price by $15,000?
Maybe.
Do we ask for $15,000 toward eligible closing costs or financing instead?
Maybe.
Could we split it?
Absolutely possible.
What I don't want to do is negotiate based on which number sounds the
most impressive.
I want to know which structure does the most for you.
A price reduction may reduce your monthly payment somewhat.
But depending on your financing, using seller concessions toward
eligible costs or a rate buydown may have a different impact on your
cash to close or monthly payment.
That's a lender calculation, not something I'm going to guess at.
I'll negotiate the real estate.
I want your lender showing us exactly what each financing option does.
What If Cash Is Your Bigger Concern?
This gets overlooked.
Sometimes the buyer isn't as concerned about shaving a little more off
the monthly payment.
They'd rather keep more money in the bank.
Buying a house takes cash.
Down payment.
Closing costs.
Moving.
Furniture.
Repairs.
And inevitably, something you didn't think you needed until
approximately three days after you move in.
If we can structure the transaction so the seller covers eligible
costs and you preserve more of your cash, that may be more valuable to
you than another reduction in purchase price.
Again:
What does this purchase need to accomplish for you?
The Seller Has a Number Too
There's another side to this.
Seller concessions cost the seller money.
If we offer $600,000 and ask for $15,000 in concessions, the seller
isn't looking at that as a clean $600,000 offer.
They're looking at their net.
That's important when I'm structuring an offer.
Sometimes asking for concessions at the right price makes sense.
Sometimes we may need to adjust the offer price.
Sometimes the seller has enough room that we can negotiate both.
And sometimes the seller is going to say no.
That's negotiation.
My job is to understand what matters most to you and then structure
the strongest offer I can around it.
Jill’s Insider Tip
Don't decide what concession to ask for before your lender runs the numbers.
If you're financing the purchase, I want to know what your lender can
legally and practically do with seller contributions under your
particular loan program.
Have them show us the scenarios.
What happens if we negotiate the price?
What happens if we ask for closing costs?
What happens if we use available seller money toward the rate?
What does each option do to your cash at closing?
What does each option do to your monthly payment?
If you don't already have a lender you trust, I have several great
lenders I work with and I'm happy to connect you with one.
Once we have the financing numbers, I can go negotiate the real estate.
Don't Forget About New Builds
Seller concessions aren't limited to resale homes.
In fact, builders can sometimes be aggressive with incentives,
especially when they have inventory they want sold.
You may see money toward closing costs, financing incentives or other
buyer incentives.
But there's usually a catch worth understanding:
Some of the strongest financing incentives may require you to use the
builder's preferred lender or title company.
That doesn't automatically make the incentive bad.
It means we compare it.
What's the purchase price?
What's the rate?
What's the payment?
What are the fees?
What are you giving up to receive the incentive?
I'm looking at the whole deal.
A giant incentive isn't automatically a giant bargain.
Jill’s Final Take
Seller concessions are back in the conversation, and that's good news
for buyers.
But I don't want to ask for seller money because somebody on the
internet said, “Buyers can get concessions now!”
I want a reason.
Maybe we want to reduce your cash to close.
Maybe the lender shows us that money toward your rate makes sense.
Maybe the house needs work and preserving your cash matters.
Maybe the seller has been sitting for 100 days and we have room to
negotiate both price and concessions.
Or maybe the house is already priced aggressively and asking for too
much could cost us the deal.
Every house is different.
So is every buyer.
Let's figure out what you need first.
Then I'll figure out how we should ask for it.
Want to Know What We Can Ask For?
If you're looking at homes in the East Valley and wondering how much
negotiating room buyers have right now, give me a call.
Send me the house you're considering.
I'll look at the price, days on market, reductions, competition and
what's happening around it.
Then, if you're financing, we'll get your lender involved and look at
the numbers.
Price. Payment. Cash. Concessions.
Let's figure out what combination makes sense for you.
602-513-6209
JillHamilton.com
Jill Hamilton, REALTOR®
Buy Sell With Jill | West USA Realty
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