WalkawaySeller concessions calculator
Seller concessions: a credit or a price cut?
A buyer asks for money toward closing. See what a credit costs you next to an equal cut in price, at your commission and transfer tax.
Type the price and the credit.
General information, not tax, legal or financial advice.
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Credit against price cut
General information, not tax, legal or financial advice.
A credit or a price cut, worked out
Take a $400,000 sale, 5.45% in agent commissions and a 1% transfer tax, and a buyer asking for $8,000.
- As a credit: commissions and tax stay on $400,000: $25,800. You keep $400,000 less that, less the $8,000 credit: $366,200.
- As a price cut: the price is $392,000, so commissions and tax are $25,284. You keep $366,716.
The price cut leaves you $516 more: the $8,000 times the 6.45% you pay on every dollar of price. Mortgage payoff and flat fees are the same either way, so they are left out of both.
What sellers ask next
What are seller concessions?
Money the seller agrees to pay toward the buyer's closing costs or repairs, shown as a credit to the buyer on the settlement statement. It comes out of the seller's proceeds at closing.
Is a credit the same as lowering the price?
Not quite. Commissions and most transfer taxes are a percentage of the price, so a credit leaves them at the full price while a price cut lowers them. At $400,000 with 6.45% in commissions and transfer tax, an $8,000 credit nets you $516 less than an $8,000 price cut.
Why would a buyer want a credit instead of a lower price?
A credit covers cash the buyer needs at closing, while a lower price mostly lowers their loan. A buyer short on cash may prefer the credit even when the price cut costs you less.
Is there a limit on seller concessions?
The buyer's loan program usually caps how large a credit can be, often as a share of the price. The buyer's lender gives the exact limit for their loan.
Do concessions change the gain on my sale?
Credits to the buyer are part of the deal's costs on the settlement statement. How they count for the gain on your sale is a question for your tax preparer.
General information, not tax, legal or financial advice.
Related
The rest of the seller's kit
- What you walk away withEvery cost of selling, line by line, and the money left at closing.
- What selling costsCommissions, transfer tax, title and credits, as dollars and a share of your price.
- Both agents' commissionsListing and buyer's agent as separate lines, and what every split costs.
- The gain on your salePrice less selling costs, what you paid and improvements, with the IRS's own figures.