What Are Seller Credits and How Can They Help You Sell Your Home?
For those of you who follow me on social media, you may have seen my reel this week where I talked about seller credits. At a recent open house, a potential buyer asked me about this topic, so I thought it would be a great opportunity to dive deeper and explain how seller credits work and how they can help both sellers and buyers in today’s market.
What Are Seller Credits?
Seller credits, also known as seller concessions, are when the seller agrees to give the buyer money at closing to help cover certain costs. These costs usually include things like closing costs, prepaid taxes, or even money to buy down the buyer’s interest rate.
For example, let’s say you’re selling your home for $500,000. A buyer makes an offer of $510,000, but only has $2,000 saved up to cover their closing costs. Their total closing costs come to $12,000. In this case, the buyer asks you, the seller, to give them $10,000 in seller credits to make up the difference. If you agree, the $10,000 comes out of your proceeds at closing and goes toward the buyer’s closing costs. This allows the buyer to move forward with the purchase of your home, even if they didn’t have all the cash needed upfront.
How Do Seller Credits Benefit the Seller?
It might sound like you’re losing money by offering seller credits, but they can actually help you sell your home faster and at a better price.
Here’s how:
Attract More Buyers: Some buyers have enough for a down payment but need help with closing costs. Offering credits makes your home more accessible to these buyers.
Sell Faster: If your home has been on the market for a while or if buyers are hesitating, seller credits can be the extra help they need to close the deal.
Maintain Your Asking Price: Instead of lowering your price to attract buyers, you can offer seller credits. This keeps your sale price higher, which may help with future appraisals or comparisons in your neighborhood.
How Do Seller Credits Help Buyers?
Many buyers today have enough saved for a down payment but need help covering closing costs. Seller credits give buyers the extra funds they need to cover those expenses, so they can close on a home they love.
In the example above, the buyer only had $2,000 for closing costs, but the total was $12,000. By negotiating $10,000 in seller credits, they were able to move forward with buying the $500,000 home. Without those credits, they might not have been able to complete the purchase.
Some buyers also use seller credits to "buy down" their mortgage interest rate, lowering their monthly payment. This can make homeownership more affordable in the long run.
Are There Limits to Seller Credits?
Yes. Seller credits are limited by the type of loan the buyer is using. Conventional loans, FHA loans, and VA loans all have different rules on how much a seller can contribute. For example, some loans may cap seller credits at 3% or 6% of the home’s sale price.
If you’re unsure how much you can offer, I can help you review the buyer’s financing and explain the limits.
Should You Offer Seller Credits?
Seller credits can be a smart tool in certain situations. If you’re in a competitive market with lots of buyers, you might not need to offer them. But if buyers are asking for help with closing costs, offering credits could be the difference between getting your home sold or having it sit on the market.
As a licensed real estate agent and mortgage broker, I can help you figure out if seller credits make sense for your sale.
Selling A Home or Thinking of Listing A Home?
If you’re thinking of selling your home or thinking of listing a home in Wayne NJ, Kinnelon NJ, Riverdale NJ, Montville NJ, Pompton Plains NJ, or Pequannock NJ, contact me to see how using RealVitalize® can enhance your home’s appeal and market value with ease.
Your Next Step
Ready to get started? Whether you’re listing and selling your home or looking to buy your dream home here in Wayne NJ, Kinnelon NJ, Riverdale NJ, Montville NJ, Pompton Plains NJ, or Pequannock NJ, I’m here to help. Let’s make your real estate goals a reality—call or text me at (973) 476-1728.
About Stephen Tinney
Stephen Tinney, Owner of 1-Stop-Steve and Coldwell Banker Sales Agent
I help my clients sell homes in Wayne NJ, Kinnelon NJ, Riverdale NJ, Montville NJ, Pompton Plains NJ, or Pequannock NJ and surrounding areas. My goal is to make the real estate process simple and successful.
I’m both a licensed Real Estate Agent and Mortgage Broker. This allows me to guide clients through every step of buying or selling a home.