As you are looking at homes and considering a home purchase in Sunset Beach, you may have run into the word concessions. It is not a new term in real estate, but the use of concessions has picked up recently.
What Are Concessions?
A concession is something that many sellers are offering right now to help buyers secure the purchase of their home. Several concessions are being offered, some more common than others. In a way, it is the seller helping a buyer out to help get the home sold. Many times, concessions can be beneficial for both the home buyer and the seller.
How Can Concessions Be Beneficial?
There are many ways that sellers can offer concessions to help alleviate some of the cost challenges in a home purchase. Some of the most common concessions offered include:
Interest Rate Buy Down
An interest rate buy-down is when the home seller offers to pay the fee a mortgage lender charges to temporarily reduce the mortgage interest rate for a borrower. Lenders will allow a buyer to pay more money in a lump sum at the beginning of the loan in exchange for a temporary reduction in mortgage interest. This reduction can be anywhere from half a percentage to a full percentage or more, depending upon the lender and how solid a candidate the borrower is. When this is offered as a concession, the seller will pay the lump sum to the lender on the homebuyer/borrower’s behalf so that they can benefit from a lower mortgage payment for the first year or so of the loan. In most cases, this is a higher monetary savings than offering below the list price for a home.
Seller Paying a Portion of Buyer’s Closing Costs
Closing costs are often not planned for when calculating the initial costs of purchasing a home, yet they are well-known and require up-front out-of-pocket money from the home buyer. There are several ways to offset or mitigate these costs. One of them is asking the home seller to pay a portion of the closing costs the buyer is responsible for. When a seller pays a portion of the buyer’s closing costs, it enables them to use that money in other ways in the purchase, like putting more money into their down payment. This then allows the buyer to borrow less money from the bank for the mortgage loan and benefits the buyer with the ability to pay less in mortgage payments. It may also earn them a lower interest rate as it reduces the risk of lending money to the borrower. It may also allow a borrower to get to that 20% down payment and eliminate the need to pay for mortgage insurance, which is another significant cost savings.
In many cases, these concessions are beneficial not just to the buyer but also to the seller. Offering a concession can help a buyer who is on the fence take the next step of making an offer on the home. They can also help sellers to secure a higher purchase offer price on the home, as the savings from concessions bring larger savings than a price reduction.
When considering your offer on a Sunset Beach home, talk over the options of asking for a seller concession. It may be hugely beneficial to make a full price offer. This will help your offer get accepted while also saving you more money than offering a lower price for the home would. It is well worth looking over the options.
If you are considering selling your home in Sunset Beach, please contact us. We are here to help you with any Sunset Beach real estate needs, both buying and selling properties.
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