Glossary
Seller concessions
Seller concessions are money the seller gives the buyer at closing, usually toward the buyer's closing costs or repairs. They lower what the seller nets from the sale without changing the contract price.
Concessions matter twice for an investor. When you sell a flip, they come out of your proceeds. When you pull comps, a sale with big concessions looks higher than what the buyer really paid.
How they affect a flip
Many buyers, especially first-time buyers, ask for help with closing costs. Plan for it. Run The Deal defaults to 1% of the sale price for concessions, on top of a 5.5% commission.
- Contract price
- $320,000
- Planned concessions (1%)
- -$3,200
- Buyer asks for $8,000 instead
- -$4,800 more than planned
Adjusting comps for concessions
If a comp sold for $300,000 with 5% in seller credits, part of that price was really a discount. Run The Deal treats 3% as normal and adjusts a comp down for concessions above that. Here, 2% of $300,000 is a $6,000 adjustment, so the comp counts as $294,000. Comps with concessions over 6% are flagged.
What to watch
- Loan programs cap how much a seller can contribute. Credits over the cap may not be usable by the buyer.
- A price increase paired with a matching credit can fail the appraisal.
- Concessions are part of closing costs on the sell side. Keep them in your MAO math.
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