Last updated: October 23, 2026
Short answer: A seller concession is money you, the seller, agree to put toward the buyer's closing costs, prepaid items or a rate buydown. Loan programs cap it: 6% for FHA, 4% for VA, and 3% to 9% for conventional loans. In today's Avondale market, a well-placed credit can beat a price cut. Start with a free home value report.
Key takeaways
- In 85392, 38.5% of homes had a price drop and homes sold for about 98.9% of list price (Redfin market data, three months ending September 2026).
- Limits: FHA 6% of the sales price, VA 4% of reasonable value, conventional 3%, 6% or 9% depending on the down payment (2% for investment properties).
- The credit can't be more than the buyer's actual closing costs on a conventional loan. Anything extra must come off the price.
- With mortgage rates averaging 7.32%, many buyers care more about cash to close and the monthly payment than the sticker price.
¡Qué tal! I'm Rosie Armenta. When an offer comes in with "seller to pay $10,000 toward buyer's closing costs," a lot of sellers feel like someone just reached into their pocket. I understand. But Mariela and I have watched concessions save deals, and sometimes they put more money in the seller's pocket than a price cut would. Here's how they work, and how to decide.
What is a seller concession?
A seller concession (also called a seller credit or an interested party contribution) is money the seller agrees to pay at closing on the buyer's behalf. Depending on the loan, it can pay for the buyer's:
- Lender fees and other closing costs, like title and escrow
- Prepaid items, like the first year of homeowners insurance and property tax reserves
- Discount points or a temporary rate buydown, which lowers the buyer's payment
The money doesn't go to the buyer in cash. It shows up as a credit on the closing statement, and your proceeds go down by the same amount.
How much can a seller pay toward closing costs?
| Buyer's loan | Maximum seller contribution | Good to know |
|---|---|---|
| FHA | 6% of the sales price | Covers origination fees, other closing costs, prepaid items, discount points and rate buydowns. |
| VA | 4% of the home's reasonable value (for concessions) | VA doesn't limit credits for normal loan closing costs. The 4% cap is for concessions like paying the funding fee, prepaying the buyer's property taxes and insurance, a temporary rate buydown, or paying off the buyer's debts. |
| Conventional, primary or second home | 3%, 6% or 9% | Fannie Mae: 3% if the buyer puts down less than 10%, 6% with 10% to just under 25% down, and 9% with 25% or more down. |
| Conventional, investment property | 2% | Any down payment. |
Sources: HUD Handbook 4000.1, VA.gov, Fannie Mae Selling Guide B3-4.1-02. Checked October 23, 2026.
For conventional loans, Fannie Mae also says the contribution can't be more than the buyer's actual closing costs. If the credit is bigger, the extra counts as a sales concession that has to be subtracted from the price. That's why we write concessions as "up to" an amount.
Is a concession better than a price cut?
Here's a worked example for a typical north Avondale home, using the 85392 median sale price and this week's average rate. The buyer puts 5% down on a 30-year fixed loan. My math, rounded.
| $12,600 price cut | $12,600 seller credit | |
|---|---|---|
| Sale price | $407,400 | $420,000 |
| Buyer's loan | $387,030 | $399,000 |
| Buyer's principal and interest at 7.32% | about $2,659 | about $2,741 before any buydown |
| Buyer's cash to close | Down payment plus full closing costs | Down payment, with $12,600 of closing costs covered |
| Seller's net from price and credit | $407,400 | $407,400 |
Price: 85392 median of $419,877 (Redfin market data, three months ending September 2026), rounded. Rate: Freddie Mac PMMS, October 22, 2026. $12,600 is 3% of $420,000, the most a conventional buyer with less than 10% down can receive.
Your net is about the same either way. The difference is what the buyer feels. The price cut lowers their payment by only about $82 a month. The credit takes $12,600 off what they have to bring to closing, or it can buy down their rate. For buyers who are short on cash, that's often the difference between "yes" and "we'll keep looking."
A price cut has one real advantage: it can bring your home into a lower search range. And a higher contract price with a credit still has to appraise. If the appraisal comes in low, the deal may need to be renegotiated.
When should I offer a seller concession?
- Your home has been sitting. With 38.5% of 85392 homes taking a price drop, buyers are negotiating. Offering a credit in the listing can bring in buyers who are short on cash to close.
- The inspection found something. A credit is often easier than scheduling repairs before closing. My guide to what happens at an Arizona home inspection explains the repair request.
- Your likely buyers use FHA or VA. Many first-time and military buyers need help with closing costs more than a lower price.
- You'd rather protect your price. A credit can keep your sale price stronger for the appraisal and for your neighbors' future comps.
It may not make sense if you have multiple offers, if your home is already priced below nearby sales, or if the credit would push the price above what an appraiser can support.
How does a concession change what I walk away with?
Every dollar of concession is a dollar off your proceeds, the same as a price cut. That's why I always build a seller's net sheet before we answer an offer. It shows your sale price, payoff, title and escrow fees, agent compensation (which is negotiable, not set by law or any association), and any credit, so you can compare offers side by side. My guide to what it costs to sell a house in Avondale walks through each line, and how long it takes to sell in Avondale shows today's days on market.
How do I write a concession into the contract?
The concession goes in the purchase contract as a dollar amount or a percentage of the price, usually written as "up to" so any unused part isn't paid out. Your escrow officer then applies it on the closing statement. If a buyer asks for a credit after the inspection, it can also be added later in writing. Let us handle the wording so it matches the buyer's loan limits.
Ready to see your numbers?
Get a free home value report, or look at the Avondale home values and market report. Then call or text me at 623-295-5770, and Mariela and I will put a price-cut-versus-credit net sheet in front of you before you decide anything.
Frequently Asked Questions
What is a seller concession in real estate?
A seller concession is money the seller agrees to pay at closing toward the buyer's closing costs, prepaid items or a rate buydown. It appears as a credit on the closing statement and reduces the seller's proceeds by the same amount.
How much can a seller pay toward closing costs on an FHA loan?
HUD allows interested parties, including the seller, to contribute up to 6% of the sales price toward the buyer's origination fees, other closing costs, prepaid items and discount points.
What is the VA seller concession limit?
VA limits seller concessions to no more than 4% of the home's reasonable value. VA doesn't limit seller credits for the buyer's normal loan closing costs. Concessions include things like paying the VA funding fee, prepaying the buyer's property taxes and insurance, a temporary rate buydown, or paying off the buyer's debts.
What is the seller concession limit on a conventional loan?
For a primary home or second home, Fannie Mae allows 3% when the buyer puts down less than 10%, 6% with 10% to just under 25% down, and 9% with 25% or more down. For investment properties, the limit is 2%.
Is a seller credit better than lowering the price?
Often, for buyers who are short on cash. In our example on a $420,000 Avondale home, a $12,600 price cut lowers the buyer's payment by only about $82 a month, while a $12,600 credit covers $12,600 of their closing costs. The seller nets about the same either way.
Can a seller concession be more than the buyer's closing costs?
Not on a conventional loan. Fannie Mae says financing concessions must be equal to or less than the buyer's closing costs, and any extra is treated as a sales concession that must be deducted from the price.
Do seller concessions affect the appraisal?
They can. The home still has to appraise at the contract price. If the price is raised to cover a credit and the appraisal comes in lower, the buyer and seller may need to renegotiate.
Are seller concessions common in Avondale right now?
Buyers are negotiating. In ZIP 85392, 38.5% of homes had a price drop and homes sold for about 98.9% of list price over the three months ending September 2026, according to Redfin market data. Credits are one of the tools buyers and sellers use.
About the authors
Rosie Armenta is a REALTOR® with West USA Realty. She and her daughter, Mariela Armenta, work together as a mother-daughter team. North Avondale (85392) is their home base, and they help buyers and sellers across the West Valley in English and Spanish. Call or text 623-295-5770, or get a free home value report.
Rosie Armenta, REALTOR® | West USA Realty | Equal Housing Opportunity
Figures were checked on October 23, 2026, from HUD Handbook 4000.1, VA.gov, the Fannie Mae Selling Guide (B3-4.1-02, Interested Party Contributions), the Freddie Mac Primary Mortgage Market Survey (October 22, 2026), and Redfin market data for ZIP 85392 (three months ending September 2026). Examples are for illustration only. Loan rules change, so the buyer's lender confirms the limits for each loan.