# Seller Concessions: The Homebuying Tool More Buyers Should Be Using Right Now

By Dave Cook (@davecook) · Published 2026-09-04

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# Seller Concessions: The Homebuying Tool More Buyers Should Be Using Right Now

**Most buyers negotiate the price of the house.**

Smart buyers also ask:

**What can the seller's money do for me?**

That's an especially important question in today's Denver housing market.

According to the latest Colorado Association of REALTORS data, **seller concessions appeared in 62.7% of Denver-metro home sales in July**, with a typical concession of approximately **$9,750—or about 1.7% of the sale price.**

Think about that.

Nearly **two out of every three sales** included some type of seller concession.

Yet I still talk to buyers who don't really understand what a seller concession is—or how strategically it can potentially be used.

So, let's fix that.

## What Is a Seller Concession?

A seller concession is money the seller agrees to contribute toward certain costs associated with the buyer's transaction.

Instead of the seller simply reducing the purchase price, the seller may agree to pay some of the buyer's allowable costs.

Depending on the loan program and transaction, that money may potentially help cover things like:

-   Closing costs
    
-   Prepaid expenses
    
-   Discount points for a permanent rate buydown
    
-   The cost of an eligible temporary rate buydown
    

There are specific limits and rules depending on the mortgage program, down payment, occupancy and transaction.

But conceptually, here's what's important:

**A seller concession can allow you to use the seller's money for an expense you otherwise would have paid yourself.**

And that can be powerful.

## $10,000 Off the Price vs. a $10,000 Seller Concession

Here's where this gets interesting.

Imagine you're buying a **$600,000 home**.

The seller is willing to give up $10,000 to make the deal happen.

You have two possible negotiations:

### Option A: Reduce the price by $10,000

Purchase price:

**$590,000**

Sounds great.

And there's certainly nothing wrong with paying less for a house.

But depending on your down payment and loan structure, that $10,000 reduction might only lower the monthly principal and interest payment by a relatively modest amount.

### Option B: Keep the $600,000 price and negotiate a $10,000 concession

Now we may potentially have **$10,000 available toward eligible transaction costs.**

Maybe that covers a significant portion of your closing costs.

Maybe it helps buy down the interest rate.

Maybe we use some toward closing costs and some toward the rate.

**Same $10,000 negotiation.**

Potentially very different financial result.

That's why I don't want my buyers negotiating in a vacuum.

**The Realtor and lender should be strategizing together.**

## Could a Seller Pay Your Closing Costs?

Yes, subject to the rules of the mortgage program and the actual allowable costs.

And this can make an enormous difference.

Suppose you have enough money for your down payment, but doing the down payment **plus** closing costs would leave your savings account uncomfortably low.

A seller concession might allow you to preserve some of that cash.

Instead of draining another $10,000 from savings at closing, perhaps that money stays in your bank account.

Now you have money available for:

Moving.

Furniture.

Repairs.

An emergency fund.

Or simply sleeping better at night.

**Getting into the house matters. So does having money left after you get the keys.**

## Could the Seller Buy Down My Mortgage Rate?

Potentially, yes.

This is one of my favorite uses to analyze.

A seller concession can potentially be applied toward discount points to permanently reduce the mortgage rate, subject to applicable program limits.

It may also be possible to fund an eligible **temporary buydown**, such as a 2-1 buydown.

With a temporary buydown, money is placed into an account that subsidizes a portion of the borrower's payment during the initial years of the mortgage.

Importantly, on a conventional Fannie Mae loan, the borrower still qualifies using the actual note rate—not the temporarily reduced payment.

So, a temporary buydown isn't a way to qualify for a mortgage you otherwise couldn't afford.

It's a **cash-flow strategy.**

And sometimes that can be incredibly useful during the first couple of years of homeownership.

## Permanent Buydown or Temporary Buydown?

This is where I want to run the math.

Neither is automatically better.

### A permanent buydown

You pay discount points upfront in exchange for a lower interest rate for the life of the loan.

That may make sense if you expect to keep the mortgage long enough for the monthly savings to outweigh the upfront cost.

### A temporary buydown

The payment is temporarily subsidized for a defined period before returning to the full note payment.

That can be attractive for someone who expects income to increase or simply wants additional breathing room after purchasing.

But I don't want to choose either one because it **sounds** good.

I want to calculate:

**What does it cost?**

**How much does it save?**

**What's the break-even point?**

**How long do you realistically expect to have this mortgage?**

Then we decide.

## Can the Seller Just Give Me Whatever Amount I Want?

No.

Every loan program has rules.

For example, under current Fannie Mae conventional guidelines, allowable financing concessions on a principal residence or second home generally range from **3% to 9%**, depending on the loan-to-value ratio.

For investment properties, Fannie Mae's limit is generally **2%**.

And the allowable concession cannot simply exceed the buyer's eligible closing costs and become cash back to the borrower.

Other programs have their own rules.

VA loans, for example, have specific seller-concession rules, and certain concessions are subject to a **4% limit**, while some customary closing-cost payments and discount points are treated differently under VA guidelines.

**This is why the financing needs to be part of the offer strategy.**

Don't negotiate $25,000 in seller concessions and figure out afterward whether you can actually use it.

Let's calculate it first.

## Why Seller Concessions Matter So Much Right Now

Because buyers currently have something they haven't consistently had over the last several years:

**Negotiating leverage.**

Denver's market isn't uniform. A great house that's priced correctly can still sell quickly and attract competition.

But overall, buyers have more room to negotiate.

Colorado Association of REALTORS reported concessions in nearly two-thirds of Denver-metro July sales. Attached properties—condos and townhomes—were even more likely to include concessions than detached homes.

And [Realtor.com](http://Realtor.com)'s August Denver data released today shows **31.4% of listings had undergone a price reduction**, compared with 20.4% nationally.

That doesn't mean you should make a ridiculous offer on every house.

It means:

**We should look for leverage.**

How long has the property been listed?

Has the price already been reduced?

Did another contract fall apart?

Is the seller motivated?

Does the house need cosmetic work?

Are there competing offers?

And most importantly:

**What does the buyer actually need?**

That's how we decide what to ask for.

## Don't Automatically Ask for a Lower Price

This might sound strange coming from someone helping you buy a house.

Of course I want you to negotiate a good price.

But **price is only one lever.**

Suppose the seller is willing to give up $15,000.

Your Realtor might negotiate that as a price reduction.

But what if your biggest problem isn't the purchase price?

What if it's:

**Cash to close?**

**Monthly payment?**

**Keeping an emergency fund?**

Then perhaps some or all of that $15,000 would create more immediate value as a concession.

That's the conversation I want to have **before the offer is written.**

## Here's How I Like to Approach It

When one of my buyers finds a house, I don't just want the Realtor to call and say:

**“Dave, they're offering $600,000.”**

I want to know what's happening with the property.

Then we can model different structures.

Maybe:

**$590,000 with no concession.**

Or:

**$600,000 with $10,000 toward closing costs.**

Or:

**$600,000 with $10,000 toward a permanent rate buydown.**

Or:

**$600,000 with a concession structured between closing costs and a temporary buydown.**

Then the buyer can see the actual differences in:

**Cash to close.**

**Monthly payment.**

**Interest cost.**

**Break-even.**

**Money remaining in savings.**

Now we're negotiating intelligently.

## Dave's Take

After more than 26 years in mortgage lending, I've learned that the **purchase price gets way too much attention by itself.**

It's important.

But the best deal isn't necessarily the house with the lowest negotiated price.

The best deal is the **best overall financial structure for that particular buyer.**

Sometimes that's a lower price.

Sometimes it's seller-paid closing costs.

Sometimes it's using the seller's money to improve the mortgage.

And sometimes it's a combination.

This is also why I love when my buyers and their Realtors involve me **before** they write the offer.

Give me ten minutes.

Let me run the numbers.

Then let's decide what we actually want from the seller.

Because if they're willing to give us $10,000...

**I want to make sure we're putting that $10,000 where it helps you the most.**

## The Bottom Line

Seller concessions aren't a loophole.

They're a legitimate negotiating tool—and in today's Denver market, they're extremely common.

If you're buying a home, don't only ask:

**“How much can I get off the price?”**

Ask:

**“How can we structure this offer to put me in the strongest financial position?”**

Maybe that's a price reduction.

Maybe it's closing costs.

Maybe it's a rate buydown.

Maybe it's preserving more of your savings.

**The answer depends on your mortgage, your finances and the property.**

And that's exactly why I want the financing strategy happening alongside the real-estate negotiation—not after it.

**Before you make the offer, let's run the numbers.**

* * *

## ABOUT THE AUTHOR

**Dave Cook | Branch Manager & Loan Officer**

Dave Cook is the founder of **Denver Mortgage Lounge, a Division of Luminate Bank**. For more than 26 years, he's helped individuals and families navigate mortgage financing and make smarter real estate decisions.

Dave's approach goes beyond getting a loan approved. He believes mortgage financing should support a client's broader financial goals and long-term wealth-building strategy.

**Dave Cook**  
Branch Manager | Loan Officer  
Denver Mortgage Lounge, a Division of Luminate Bank  
201 Columbine Street, Suite 300  
Denver, CO 80206  
Phone: **303-226-8735**  
Email: [**dave@denvermortgagelounge.com**](mailto:dave@denvermortgagelounge.com)  
Website: [**denvermortgagelounge.com**](http://denvermortgagelounge.com)

Dave Cook NMLS #274175  
Luminate Bank NMLS #1281698  
Equal Housing Lender

_This article is for educational purposes only and is not legal, tax or financial advice. Loan programs, guidelines, rates, fees and eligibility requirements are subject to change. All loans are subject to credit approval and program eligibility._