Examples of Seller Concessions: When Buyers Request Chickens, Pool Tables, and More

Just like seasonal sales offer retail shoppers a little something extra for their purchase, so do concessions in real estate. Concessions are incentives that you as a seller offer to buyers to sweeten the pot, such as paying certain fees at closing or offering money for needed repairs. However, used incorrectly, offers for concessions can backfire. We’ve asked 3 top real estate agents across the country to give us some firsthand seller concession examples and their tips on how to avoid misusing these bargaining chips.

Concession example #1: Repair requests based on the inspection

Concessions typically crop up during the inspection period, or what top-selling Charleston, South Carolina real estate agent Jonathan Wells calls “the second round of negotiations.” Based on whatever the home inspection uncovers, the buyer’s agent will make various requests to remedy items that could impact the home’s safety or value. Some of the most common repairs that you can offer to handle or provide a repair credit for include:

• Plumbing, sewage, and septic problems
• Electrical or fire hazards
• Pest or wildlife infestation
• HVAC problems
• Roof damage
• Structural damage
• Asbestos, radon, and lead paint
• Broken appliances

As a seller, you may have no choice but to deal with problems that the home inspection reveals to be dangerous, such as outdated wiring, foundation or structural instability, mold,  or termites. But a top real estate agent can help you minimize what you’re willing to offer.

Show that it’s an improvement, not a repair

“I had a home inspection ask for $50,000 worth of repairs to a house. We identified those as improvements, not repairs, and showed them that they were getting the house at a good price, and it reflected the condition of the house,” says Casey Samson, a top real estate agent serving Fairfax County in Maryland. Instead of repairs, the buyers were willing to take the lawn furniture worth roughly $600 as a concession.

Offer a credit or warranty

Wells says most of the concessions that he handles involve repairs for a major system such as the HVAC or perhaps a roof. In lieu of repairs, he’s offered a home warranty or applied an allowance toward such repairs or closing costs, which lenders often prefer. He recently sold a property where the buyer and seller agreed for the seller to apply a $5,000 credit at closing in lieu of replacing the HVAC.

A seller can open themselves to liability for tackling a major repair before closing if the buyer later determines it wasn’t done correctly. “It’s way better to offer money or some other concession than to offer repairs,” Wells says. “The buyer should like that too because then they get to choose who fixes it.

Concession example #2: Closing cost credits

As a homeowner you know the drill: On top of the down payment for a house, your buyer will also owe closing costs at the time of purchase. These costs can be hefty — as much as 2% – 5% of the sale price. To help offset some of the upfront cost, a buyer may ask for a closing cost credit from the seller, which could go toward their:

• Escrow fees
• Title fees
• Attorney fees
• Recording fees
• Taxes
• Interest rate buydowns
• Loan origination fees

A big incentive for buyers

If you’re struggling to attract buyers in a slow market, a closing cost credit could be one way to get their attention. Unlike a price reduction that’s only realized over the course of a mortgage payment schedule, closing cost credits offer buyers immediate lump-sum savings — money which they can then put toward furnishing their home or making updates prior to move-in.

From July 2019 to June 2020, 46% of all sellers offered incentives to attract buyers, statistics from the National Association of Realtors (NAR) show. If the market is hot like it’s been in 2020 — when more than 7 in 10 homes sold in October 2020, or 72%, were on the market for less than a month — certain concessions (especially closing cost credits) might not be necessary.

Know the limits

While some concession requests may test your patience, there are also restrictions on concessions depending on the type of loan a buyer obtains, the type of residence that the loan finances (whether it’s a primary, secondary, or investment property), and the size of the buyer’s down payment. Fannie Mae, for instance, as of Feb. 2020 caps closing cost credits— also called “interested party contributions“ — for conventional loans like so:

• 3% max if the buyer put less than 10% down (on a primary or secondary home).
• 6% max if the buyer put down 10% – 25% (on a primary or secondary home).
• 9% max if the buyer put down 25% or more (on a primary or secondary home – however, note that this would be a very generous concession).
• 2% for investment properties with down payments of any amount.

Any seller costs that exceed these limits would require a corresponding reduction in the loan amount, dollar for dollar. As of August 2019, the Department of Housing and Urban Development (HUD) caps seller concessions for FHA loans at 6%.

Concession example #3: Non-realty items of value

Buyers may also make requests for concessions in the form of personal property, also known as non-realty items of value, which are not traditionally included with the sale of the home.

Oftentimes you’ll negotiate these items apart from the home sale. Teresa Cowart, a top-selling agent in Savannah, Georgia, has written separate bills of sale for concessions such as furniture because lenders often want a contract to stick to the parameters of selling the house and property.

“Lenders don’t like when you put all that stuff in there because then an appraiser has to find some way to put value on that,” she says.

Some common requests include the dining-room chandelier, the washer and dryer, potted plants, draperies, and the wine fridge, but buyers have been known to make some strange requests, including:

• Livestock: “I had to write in 23 chickens on a deal: ‘Domestic poultry,’” Wells says. The seller had a chicken coop, and the buyer wanted the chickens, too. “They got the chickens, so that worked out.”
• Sporting or lawn equipment: Buyers sometimes take an interest in a boat or other equipment that the sellers intend to take with them when they leave. “We’ve had people ask for all kinds of stuff,” Cowart says. “I don’t think people sometimes realize the value of what they’re asking for, either. ‘Can you leave that tractor?’ Well, that tractor is $47,000.”
• Fruits and vegetables: Depending on where you live and if you have fruit trees or agricultural property, you and your agent might have to work out a concession for emblements, or crops. In a nutshell, this allows whoever grew the crops to return to pick the fruit or vegetables produced on the property they’ve sold. “It really came up for farmers when they would sell land that they would still have access to their crops,” Wells says.
• Custom fixtures: Cowart once represented a seller whose husband had a custom-built a pergola for their home. The sellers took the pergola when they moved out, but the buyers expected it to be there. Cowart says she offered to buy materials and pay the seller to build the buyers another one, or at least pay the sellers to return it. “I said, ‘Help me help you.’ … There was too much animosity over a pergola.” The sellers realized that the pergola had the wrong dimensions for their new place and returned it after all.
• Family photographs: Sellers of one historic home built in 1891 were surprised when one set of potential buyers asked them to include two framed photos from the mantle in the sale because they liked their historic look. “They were actually family photos,” Cowart says. “The sellers were like, ‘They are historic. They’re our great-grandpa. And we’re not leaving them.’”

Seller concession strategy: When to draw the line

While it’s fine to tell your agent which specific items of personal property are off-limits during the sale, it’s best to let your agent handle any concessions and negotiations. Emotions on either side can spoil any concessions someone is willing to make.

The case of the free pool table

Samson recalls how one client selling a $1.5 million house didn’t want the furniture from the basement recreation area, including a pool table. The seller happened to meet the prospective buyer during the home inspection and told the buyer that he could have the basement furniture, too.

After the inspection, the buyer requested $12,000 worth of repairs. Samson offered the basement furniture as a concession, but the buyer countered that they already had that as part of the deal.

“That was my bargaining chip,” Samson says. “When the seller found out that he had been gracious enough to give him all the basement furniture and the buyer now wanted $12,000 over and above that, the seller refused to sell the house to that buyer.”

List now, negotiate the drapes later

Sellers tend to want to present concessions upfront, such as offering a $2,000 carpet allowance when advertising the home, Wells says. But that gives away money without attracting any new buyers. He advises pricing your house correctly from the outset. The more beneficial your price bracket, the less likely you’ll feel compelled to offer concessions to bring buyers to your door.

Once you have an interested buyer, then you can negotiate repairs and anything else that proves enticing. “Absolutely throw in anything that the seller wants to sell. The drapes, the pool furniture, this lamp that the buyer is intrigued by in lieu of doing repairs,” Wells says. Having a contract tends to make those negotiations much smoother.

“Once a buyer gets under contract, I know that’s their favorite house; it’s not their 15th favorite house. Almost always, the buyer never backs out because they love the house.”

Selling ‘as is’ isn’t a failsafe

“A lot of sellers will say, ‘I’m selling the property as is,’ and we get down the road, and they’re open to the idea of offering some concessions,” Wells shares. “I do my best upfront to sell a property as is, if I’m the listing agent, and prepping them for the buyer to ask for concessions. The buyers will ask. It doesn’t hurt them to ask. But we can say ‘no.’”

Header Image Source: (Aleksandra Zelena / Unsplash)