Seller concessions in Georgia: getting help with closing costs

What a seller concession is

A seller concession — also called a seller contribution or closing-cost credit — is an agreement in the purchase contract that the seller will pay a stated amount toward the buyer's closing costs. In Georgia contracts it is usually written as a dollar amount the seller will pay at closing toward the buyer's costs, which can include prepaids and, where the lender allows, discount points.

The money does not go to you as cash. It is applied on the settlement statement against costs you would otherwise pay, reducing your cash to close.

What it can pay for

A concession cannot normally be used toward your down payment, and if the credit is larger than your actual costs the excess is usually lost or must be reduced. Ask your lender before you write the number.

• Lender fees and appraisal
• Attorney and title charges, including title insurance
• Georgia's intangible recording tax on your loan
• Prepaid interest, homeowners insurance and the initial escrow deposit
• Discount points or a temporary buydown, where your lender and program allow — see mortgage points and buydowns
• In some transactions, part of the buyer's agent compensation — see who pays the buyer's agent

Loan program limits

Every loan program caps how much a seller (and other interested parties, like a builder) can contribute, usually as a percentage of the price, and the cap can depend on your down payment and whether the home is a primary residence. Conventional, FHA, VA and USDA loans each have their own rules, and they change from time to time. Your lender is the only reliable source for the limit on your loan — get it before you make the offer.

When to ask, and when not to

Concessions are easiest to get when a home has been on the market for a while, when a seller has already cut the price, and on new construction, where builders often prefer credits to price cuts. Our live list of the slowest-selling markets around Atlanta shows where sellers are more likely to say yes.

In a competitive situation, a request for closing costs makes an offer weaker. Some buyers solve that by offering a higher price with a concession built in — the seller nets the same and the buyer finances part of their closing costs. That only works if the home appraises at the higher price, so talk it through with your agent and lender.

Concession or price cut?

Asking after inspection

Georgia buyers often negotiate repairs during the due diligence period. Instead of asking the seller to fix something, you can ask for a credit toward closing costs and handle the repair yourself after closing. Sellers often prefer it, and you control who does the work. Make sure the total credit stays within your lender's limit.

Worked example: what a credit is worth

Suppose your Loan Estimate shows $11,000 in closing costs and prepaids on a $350,000 purchase. Georgia's intangible recording tax on a $332,500 loan is fixed by statute at $997.50 ($332,500 ÷ 500 × $1.50); the rest of the $11,000 is lender, attorney, title and escrow items. A $7,000 seller concession reduces your cash to close by $7,000. A $7,000 price cut instead reduces your 5% down payment by $350 and your loan by $6,650 — a monthly saving your lender can calculate, but a far smaller immediate cash benefit.

If you have $7,000 of credit and only $6,000 of eligible costs, the extra $1,000 usually cannot come back to you. Write the concession as a figure you are confident your costs will exceed, or as 'up to' an amount.

What to ask before writing the offer

• What is the maximum seller contribution on my loan, at my down payment?
• Which of my costs can the credit be applied to, and which cannot?
• Can part of it go to discount points or a temporary buydown?
• If the home appraises low, how will the concession and price interact?
• Is the seller already paying any buyer's agent compensation that counts toward the same cap?

Common questions

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