Seller Concession
A contribution from the seller to the buyer that reduces the buyer's out-of-pocket costs, such as paying for closing costs, points, or repairs. Concessions inflate the sale price and must be adjusted for in the sales comparison approach.
Seller concessions are extremely common and must be identified and adjusted for in every comparable sale used. If a comparable sold for $400,000 with $10,000 in seller-paid closing costs, the effective price is $390,000 and a negative $10,000 adjustment is applied. Concessions can include closing costs, discount points, rate buydowns, repair credits, personal property, and other inducements. UAD requires specific reporting of concession amounts. Fannie Mae sets maximum allowable concession percentages based on property type and occupancy.
Related Terms
Adjustment
A dollar or percentage modification applied to a comparable sale's price to account for differences between the comparable and the subject property.
Arm's Length Transaction
A transaction between unrelated parties who are each acting in their own self-interest, where neither party is under duress or undue influence.
Comparable Sale
A recently sold property that is similar to the subject property in terms of location, size, condition, and features, used as evidence to support the appraiser's opinion of value in the sales comparison approach..
Sales Comparison Approach
A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.
More in Market Analysis
View allMarket Conditions
The current state of supply and demand in the real estate market for a particular property type in a defined area.
Absorption Rate
The rate at which available properties are sold or leased in a specific market during a given time period.
Days on Market (DOM)
DOMThe number of days between when a property is listed for sale and when it goes under contract.
Months of Supply
The estimated time it would take to sell all current listings at the current sales pace, calculated by dividing active inventory by the average monthly sales rate.