What is Seller Concessions?
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Why can't the seller just give me cash instead of credits?
Key Takeaways
- Lenders must track down payment sources and undocumented cash creates compliance problems
- Seller credits appear as line items that reduce specific closing costs rather than providing cash
- Options include higher credits, repair negotiations, or lower purchase price instead
Why can't sellers give me cash instead of credits?
You want cash from the seller instead of seller credits toward your closing costs. The seller can't hand you cash at closing because mortgage regulations don't allow it—lenders need to track where your down payment money comes from, and undocumented cash from the seller creates compliance issues.
Seller credits work differently than cash payments. Credits appear as line items on your closing statement that reduce what you owe at closing. The seller pays these amounts to cover specific closing costs like title insurance, appraisal fees, or prepaid taxes and insurance. Your lender applies the credits directly to those expenses rather than giving you money to spend.
If you need more flexibility with closing costs, you have a few common options. You can negotiate higher seller credits (up to certain limits based on your loan type and down payment). You can also ask the seller to pay for specific repairs or improvements before closing, or negotiate a lower purchase price instead of credits. Share your situation with your lender and they can walk you through what seller credit amounts work with your loan program.
About the Author
Dan Green
20-year Mortgage Expert
Dan Green is a mortgage expert with over 20 years of direct mortgage experience. He has helped millions of homebuyers navigate their mortgages and is regularly cited by the press for his mortgage insights. Dan combines deep industry knowledge with clear, practical guidance to help buyers make informed decisions about their home financing.
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