Seller Concessions Day 2: $10,000 Off the Price or $10,000 Toward Closing Costs?
Colorado average current median listing price is around $622,000, and the typical home is spending roughly 44 days on the market according to Realtor.com. Longer marketing periods on individual homes can sometimes create room for discussions about price or concessions. Not every house will have negotiating room, but you won't know until you study the property.
DAY 2 of 10 — $10,000 Off the Price or $10,000 Toward Closing Costs?
Here's a question many homebuyers have never been asked: Would you rather receive $10,000 off the price of a home—or have the seller contribute $10,000 toward your allowable closing costs?
You might say: “Isn't $10,000 just $10,000?” Not exactly! Let's make this very simple. Imagine buying a $650,000 home.
**Choice A: Lower the Price You negotiate the price from: $650,000 → $640,000 Great! You saved $10,000 on the price. But if you're financing most of the purchase, that $10,000 reduction gets spread across a 30-year mortgage. Your monthly payment may decline, but perhaps not nearly as much as you imagined.
**Choice B: Ask for Closing-Cost Assistance Now imagine the seller accepts $650,000 but contributes $10,000 toward allowable closing costs. That could potentially reduce the amount of your own money needed at closing. For a buyer trying to preserve cash for - Furniture, Moving expenses, Emergency savings, repairs Kids, Life, etc. That could be extremely valuable.
Think About a Pizza: Imagine a pizza costs $20, Someone offers you 50 cents off the pizza or $5 toward the delivery fee you must pay today. Which helps you more? It depends on which expense is creating the problem.
Homebuying works the same way: Don't Automatically Chase the Lowest Price. There's nothing wrong with negotiating the price, but buyers should understand the difference between Long-term savings and immediate cash-flow relief. Sometimes the strongest offer isn't - “Give me the lowest possible price.” It may be - “Let's structure this purchase so I don't drain my savings account.”
Colorado Buyers Have a Reason to Ask Questions Colorado average current median listing price is around $622,000, and the typical home is spending roughly 44 days on the market according to Realtor.com. Longer marketing periods on individual homes can sometimes create room for discussions about price or concessions. Not every house will have negotiating room, but you won't know until you study the property.
Before You Offer Have your lender show you both scenarios, don’t guess! Compare them side by side. Option 1: Lower price. Option 2: Seller closing-cost assistance.
Then ask: Which leaves me in the stronger financial position after closing? That's the number that matters!
Let's run the numbers.......Call or text 774-297-8312 before you make your next offer.
About the author — I'm Everald L. Johnson, a Colorado mortgage broker with Johnson Home Loans and Financial Services, LLC (NMLS #2443040), powered by Zero Point Mortgage Services. I work with buyers, homeowners and investors across Denver, Aurora, Colorado Springs, Parker, Lone Tree, Castle Rock, Highlands Ranch, Centennial, Littleton and the wider Front Range. Call or text (774) 297-8312 and we'll run your actual numbers together.
Frequently asked questions
- Can seller concessions help me buy a home with less cash?
- Yes. The seller may agree to pay some of your eligible closing costs. That can leave more money in your pocket for your down payment, moving expenses, or savings. Ask me how much seller help you may qualify for.
- Can the seller help lower my mortgage payment?
- Possibly. Seller concessions may be used toward an eligible temporary or permanent interest-rate buydown. A lower rate can mean a lower monthly payment. Let’s compare the numbers before you make an offer.
- Do I still need a down payment if the seller pays my closing costs?
- Usually, yes. Seller concessions normally do not replace your required down payment, but they can reduce other costs you have to pay at closing. Contact me and I’ll help estimate how much cash you may need.
- Should I ask for a lower price or seller concessions?
- It depends on what helps you most. A lower price may save money over time, while seller concessions may help reduce your upfront costs or monthly payment sooner. Also depends on your Loan type, down payment and occupancy. Each loan have difference rules. Before you write an offer, let’s run both options and see which one works better for your budget.
This article is for informational purposes and is not an offer to lend or a commitment to make a loan. All loans subject to underwriting approval, program guidelines, and appraisal. Equal Housing Opportunity.