What's a Seller Concession, and When Does It Make Sense to Offer One?

What is a seller concession in real estate?A seller concession is a cost, credit, or service the seller agrees to cover for the buyer to help a deal move forward, separate from the sale price itself. In Riverside County, the four showing up most right now are buyer's agent compensation, a one-year home warranty, termite and Section 1 clearance, and closing cost credits, and each loan type has its own limit on how much a seller can actually contribute.

A couple of years ago, offers in the Inland Empire came in clean. Full price, few contingencies, and a buyer who just wanted the keys. That's shifted. More offers now arrive with a short list of asks attached, and closing cost requests in particular are creeping back into negotiations after sitting on the sidelines for a while.

If you're getting ready to list in Moreno Valley, Menifee, or anywhere else in Riverside County, there's a good chance you'll see at least one of these requests on an offer. The question isn't whether you'll get asked. It's whether saying yes makes sense for your specific sale, how much you're actually allowed to offer depending on the buyer's loan, and how it plays out once the deal hits the closing table.

Here's what each of these concessions means, how much sellers can realistically contribute, what it looks like on paper at closing, and how to think through a request when it lands on your desk.

What Is a Seller Concession, Exactly?

A seller concession is written into the purchase contract as a credit or a commitment, not as a lower number on the listing itself. Your home still sells for the agreed price. The concession shows up as a line item that reduces what actually lands in your pocket at closing.

That distinction matters more than it sounds like it should. A $10,000 price cut and a $10,000 closing cost credit can have the exact same effect on your net proceeds, but they read completely differently. A price cut becomes public record and can make your home look like it sat too long or had a problem. A credit stays inside the transaction. For a lot of sellers, that difference in optics is worth something on its own.

The Four Concessions Showing Up Most in Riverside County Offers

1. Buyer's Agent Compensation

This is the one that's changed the most. Before 2024, it was assumed the seller would cover the buyer's agent commission, usually around 2.7% of the sale price. After the NAR settlement, that's no longer automatic. Buyers now negotiate their agent's fee separately, which means if a seller agrees to cover it, that's a concession, not a default.

In practice, most sellers in Riverside County are still offering some level of buyer's agent compensation, because it widens the pool of buyers who can realistically afford to make an offer. But it's now a number you're choosing to put on the table, not a cost you're stuck with by default.

2. A One-Year Home Warranty

This is the smallest ask on the list and usually the easiest yes. A home warranty typically runs a few hundred dollars and covers major systems and appliances for the buyer's first year of ownership. For a buyer who's nervous about an older water heater or HVAC system, it's reassurance. For a seller, it's a low-cost way to make an offer feel safer without touching the price.

3. Termite Inspection and Section 1 Clearance

This one is specific to California. A termite inspection often turns up Section 1 items, active infestation or damage that needs to be corrected, versus Section 2 items, conditions that could lead to a problem down the road. Section 1 clearance is frequently required by VA and FHA loans, which means it can become a real sticking point if it shows up after an inspection rather than being addressed before the home goes on the market.

Covering Section 1 work, either before listing or as part of negotiations, is one of the more common concessions in older Inland Empire housing stock, especially in established neighborhoods across Riverside, Perris, and Beaumont.

4. Closing Cost Credits

This is the broadest category, and the one making the biggest comeback. A closing cost credit lets the buyer roll some of their cash-to-close into the loan instead of paying it out of pocket, which can matter more to a buyer than a few thousand dollars off the price. If you want the baseline of who typically pays what at closing, that's covered in detail in our closing costs guide.

How Much Can You Actually Offer? Limits by Loan Type

Here's the part that catches sellers off guard: you can't just offer whatever number sounds reasonable. Every loan type has a cap on how much a seller can contribute, and the cap is based on the buyer's financing, not your preference.

• FHA loans: Sellers can contribute up to 6% of the lesser of the sale price or appraised value toward closing costs, prepaids, and discount points.
• VA loans: Normal closing costs (title fees, recording fees, and similar) can be paid in full by the seller with no cap. But concessions for extras like rate buydowns or paying off a buyer's debts are capped at 4% of the home's value, and anything above that is considered excessive.
• Conventional loans: Limits scale with the buyer's down payment. A buyer putting down less than 10% is generally capped at 3%, buyers between 10% and 25% down can go up to 6%, and buyers putting down 25% or more can go as high as 9%. Investment properties are capped at 2% regardless of down payment.

One more thing that trips people up: concessions can't exceed the buyer's actual closing costs. If a seller offers more than the buyer's real costs add up to, the extra doesn't become cash in the buyer's pocket. The loan amount or terms get adjusted instead.

Worked Example: A $600,000 Home in Riverside County

Say you're selling a home for $600,000, right around the current Riverside County median. Here's what a closing cost concession could look like depending on the buyer's loan:

• FHA buyer: Up to $36,000 (6%) could go toward closing costs and prepaids.
• Conventional buyer with 5% down: Capped at $18,000 (3%).
• Conventional buyer with 20% down: Could go up to $36,000 (6%).
• VA buyer: Normal closing costs can be covered in full, plus up to $24,000 (4%) for extras like a rate buydown.

In practice, most requests land well below these ceilings, often in the $5,000 to $15,000 range. But knowing the cap helps you understand whether a request is reasonable for the buyer's situation or unusually high.

Why Concessions Are Showing Up More in the Inland Empire

This isn't just a feeling. Nationally, 39% of potential sellers anticipate making concessions to buyers in 2026, up from 30% last year, according to data reported by Chicago Agent Magazine. Chicago Agent Magazine

Locally, the trend lines up. Redfin's Riverside County data shows homes sitting longer than they were a year ago, and inventory has grown across the county. More homes on the market for longer gives buyers more room to ask, and gives sellers more reason to consider what's reasonable to offer before someone else does.

This shows up across the board, from Moreno Valley to Menifee to Lake Elsinore. It doesn't mean your home is overpriced or undesirable. It means the conversation around offers has more moving pieces than it did a couple of years ago.

Concession or Price Cut? Why the Math (and the Optics) Are Different

When an offer comes in with a concession request attached, the instinct is often to compare it directly to the asking price and decide if it's "worth it." But the better comparison is against your net proceeds, not your list price.

This is where reading an offer for more than just the sale price matters. A full-price offer with an $8,000 closing cost credit and a home warranty might net you more, and close more reliably, than a slightly higher offer from a buyer who's stretched thin on cash and more likely to run into trouble during escrow.

This is exactly why we run estimated net sheets for sellers before they list, and comparative net sheets when more than one offer comes in. It takes the guesswork out of "is this a good deal" and turns it into an actual number you can compare side by side.

How a Concession Shows Up on the Closing Disclosure

It's worth knowing what this actually looks like on paper, because it's simpler than it sounds. A seller concession appears as a line item, usually labeled something like "seller credit" or "seller-paid closing costs," on the closing disclosure.

For the buyer, it shows up as a reduction to the cash they need to bring to closing. For you as the seller, it shows up as a deduction from your gross proceeds, right alongside your existing loan payoff, prorated property taxes, and any commissions. It doesn't change the recorded sale price of the home. The county records show the full $600,000, for example, while your net proceeds reflect the $600,000 minus the credit you agreed to.

This is also why a concession and a price reduction aren't interchangeable for tax or comparable-sales purposes, even though they can be nearly identical for your bottom line. The sale price used for comps, appraisals, and your own records stays at the agreed contract price.

How to Decide What's Worth Offering

A few things worth thinking through before you say yes or no to a concession request:

• Does it solve a real problem for the buyer, or is it just an ask? A request tied to something specific, like a credit after a termite inspection or help with a rate buydown, tends to be more reasonable than a blanket "seller to pay $X."
• Is the request within the buyer's loan limits? If a conventional buyer with 5% down is asking for 6%, something doesn't add up, and it's worth asking your agent or the buyer's lender to clarify.
• What does it actually do to your net? Run the number before reacting to the request itself.
• What's your alternative? If the home has been sitting and this is your strongest offer, a concession that gets it across the finish line is often worth more than holding out for a cleaner-looking number that may not show up again.

None of this means saying yes to everything. It means knowing what each request actually costs you, and whether it's even structurally possible, before you respond.

Frequently Asked Questions

Do I have to pay the buyer's agent commission as the seller?No. Since the 2024 NAR settlement, buyer's agent compensation is negotiated separately and isn't automatic. Many sellers still offer it because it widens the buyer pool, but it's a choice you make, not a default cost.

Is a one-year home warranty really worth offering?For most sellers, yes. It's typically a few hundred dollars and gives buyers reassurance about major systems and appliances, which can make an offer feel safer without affecting your price.

What is Section 1 clearance and who usually pays for it?Section 1 clearance refers to active termite damage or infestation found during inspection, which is often required for VA and FHA loans. Responsibility for this work is negotiable, but it frequently becomes a seller concession if it comes up after the home is already in escrow.

Is there a limit to how much I can offer as a seller?Yes, and the limit depends on the buyer's loan type, not on what you're willing to give. FHA allows up to 6%, VA caps certain concessions at 4%, and conventional loans range from 3% to 9% based on down payment. Anything beyond what the buyer's actual closing costs require typically can't be paid out as cash.

What if a buyer asks for more than their loan program allows?This usually means the request needs to be restructured, either reduced to fit within the cap, or split between a concession and a price adjustment. Your agent and the buyer's lender can sort out what's actually allowable before you agree to anything.

Does offering a concession affect my taxes or how my home sale is recorded?The recorded sale price stays the same. A concession reduces your net proceeds, similar to a commission, but the contract price used for county records, comps, and appraisals doesn't change. This article is for general information only. Talk to a tax professional about how a concession applies to your specific situation.

Ready to Find Out What Your Home Is Worth?

Every offer is different, and so is every net sheet. If you're getting ready to sell in Moreno Valley, Riverside, Menifee, Perris, Beaumont, or anywhere else in the Inland Empire, call or text Chris Leeper at 951-741-5311 or visit https://linktr.ee/leeperrealtygroup. We'll run the numbers before you list, so when an offer comes in with a concession attached, you'll already know exactly what it means for your bottom line.

Chris Leeper, REALTOR®, DRE #01881634. Brokered by eXp Realty of California, Inc.

This article is for informational purposes only and does not constitute legal, tax, or financial advice. Concession limits vary by lender and loan program and are subject to change. Consult your agent and lender for guidance specific to your transaction.