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What Does Concession Mean In Real Estate

In the world of real estate, concessions play a crucial role in shaping the dynamics of property transactions. While many people are familiar with the term, what exactly does concession mean in the context of real estate? Understanding this concept is essential for both buyers and sellers to navigate the intricacies of the market.

Concession in real estate refers to a negotiated agreement between the buyer and seller that involves the seller providing certain incentives or benefits to the buyer. These concessions can take various forms, such as lowering the selling price, offering to cover closing costs, providing repairs or upgrades to the property, or including additional amenities or perks. Concessions are often used as a strategy to attract potential buyers or to facilitate the closing of a deal.

Understanding Concessions in Real Estate

In the world of real estate, the term “concession” refers to a negotiation strategy used by sellers to make their properties more appealing to potential buyers. Concessions can take many forms, such as offering discounts on the purchase price, providing incentives, or including additional amenities. These concessions are often used as a way to overcome certain challenges or to sweeten the deal for buyers.

Concessions in real estate are not limited to just sellers; buyers can also use concessions to their advantage during negotiations. By understanding the concept of concessions and how they can be utilized, both buyers and sellers can navigate the real estate market with more confidence and achieve their desired outcomes. In this article, we will explore the meaning of concessions in real estate, the different types of concessions, and how they can impact the buying and selling process.

But first, let’s discuss the importance of concessions in real estate transactions and how they can influence the overall dynamics of the market.

The Significance of Concessions in Real Estate

Concessions play a crucial role in the real estate market as they serve as incentives to attract and motivate buyers. In a competitive market where there are multiple properties available, concessions can be the differentiating factor that compels buyers to choose one property over another.

For sellers, concessions can help speed up the selling process, especially if a property has been on the market for an extended period. By offering concessions, sellers can make their property more attractive to potential buyers, enticing them to make an offer quickly. This can help sellers move on to their next property and avoid the carrying costs associated with an unsold property.

On the other hand, buyers can benefit from concessions as well. By negotiating concessions, buyers can secure a better deal, potentially saving money on the purchase price or gaining additional benefits, such as upgraded appliances or closing cost assistance.

Overall, concessions can create win-win situations for both buyers and sellers in a real estate transaction. However, it’s important for both parties to understand the various types of concessions available to them and how these concessions can impact the overall dynamics of the transaction.

Types of Seller Concessions

Sellers have a range of concessions they can offer to potential buyers to make their property more appealing. Let’s explore some of the most common types of seller concessions in the real estate market:

  • Price Reduction: Sellers can offer a price reduction on the property, reducing the asking price to attract potential buyers. This concession can often incentivize buyers to make an offer as they perceive the property to be a better value.
  • Appliance or Furniture Inclusion: Sellers can sweeten the deal by including certain appliances or furniture in the sale of the property. This can be particularly appealing to buyers who are looking for a move-in ready home.
  • Home Improvement Credits: Sellers can provide credits to buyers that can be used for future home improvements or repairs. This concession can help buyers address any immediate concerns they may have about the property’s condition.
  • Closing Cost Assistance: Sellers can assist buyers with their closing costs, including expenses such as appraisal fees, title insurance, or attorney fees. This can alleviate financial burdens for buyers and make the overall transaction more affordable.
  • Extended Home Warranty: Sellers can offer an extended home warranty as part of the purchase agreement. This can give buyers peace of mind knowing that they are protected against certain repairs or issues that may arise after the purchase.

These are just a few examples of the concessions sellers can offer to make their property more attractive in the market. The specific concessions offered will depend on the seller’s circumstances, market conditions, and buyer preferences.

Negotiating Concessions as a Buyer

As a buyer, understanding how to negotiate concessions can give you an advantage in the purchasing process. While concessions may not always be explicitly offered, it is worth exploring the possibility during negotiations.

Here are some strategies for negotiating concessions as a buyer:

  • Research the Market: Before entering into negotiations, it’s important to research the local market to understand the current conditions and comparable property prices. This information can give you a better idea of what concessions you can reasonably ask for.
  • Identify Areas of Potential Concessions: Assess the property and identify any areas where you may want or need concessions. This can include repairs or upgrades, closing costs, or specific appliances or furniture.
  • Make a Reasonable Offer: When making an offer, be sure to consider the fair market value of the property and any concessions you are requesting. Making a reasonable offer strengthens your negotiation position.
  • Articulate Concession Requests: Clearly communicate to the seller or their agent what concessions you are seeking and why. Providing a rationale for your requests can help the seller understand your perspective and motivate them to consider granting them.
  • Be Flexible and Open to Counteroffers: Negotiations involve back-and-forth communication. Be prepared for counteroffers from the seller and be willing to negotiate to find a mutually agreeable solution.

Remember, negotiations are a give-and-take process, and concessions are just one aspect of the overall transaction. Being prepared, knowing your options, and effectively communicating your needs can increase your chances of successfully negotiating concessions as a buyer.

The Role of Concessions in Closing the Deal

Concessions can play a pivotal role in closing a real estate deal. Once negotiations are complete and both parties have agreed on the terms, concessions are typically formalized through a written agreement, such as an addendum to the purchase contract.

It’s essential for both buyers and sellers to fulfill their respective obligations related to the concessions outlined in the agreement. Buyers should carefully review the terms to ensure they receive the agreed-upon concessions, and sellers should follow through on the promises made during negotiations.

By closing the deal and fulfilling the concessions, both parties can proceed with the transaction with confidence, knowing that their expectations have been met. It’s important to consult with a real estate professional or attorney to ensure all legal and contractual requirements are met during this process.


Concessions are an integral part of the real estate market, serving as incentives to attract and motivate buyers. Sellers can use concessions to make their properties more appealing, while buyers can negotiate concessions to secure a better deal. By understanding the various types of concessions and how to navigate the negotiation process, both buyers and sellers can achieve their desired outcomes in a real estate transaction.

Whether you’re a buyer or a seller, it’s important to work with a knowledgeable real estate professional who can guide you through the concessions process and ensure that your interests are protected. With the right approach and a clear understanding of concessions, you can make informed decisions and find success in the dynamic world of real estate.

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Frequently Asked Questions

In the realm of real estate, there are many terms and concepts that may be unfamiliar to the average person. One such term is “concession.” Understanding what concession means in real estate is essential for buyers, sellers, and agents alike. Below, we’ve provided answers to some commonly asked questions about concessions in real estate.

1. What is a concession in real estate?

In real estate, a concession refers to a negotiated agreement between a buyer and seller that involves the seller offering benefits or incentives to the buyer. These benefits can come in various forms, such as a price reduction, payment of closing costs, or including certain appliances or furniture in the sale. Concessions are often used to attract buyers or facilitate a smoother transaction.

For example, if a seller agrees to pay a portion of the buyer’s closing costs, it can reduce the financial burden on the buyer and make the purchase more affordable. Similarly, offering a lower sale price or including valuable items in the sale can make the property more appealing to potential buyers.

2. How do concessions affect the purchase price of a property?

Concessions can have an impact on the purchase price of a property. If the seller offers a concession, such as a price reduction or payment of closing costs, the buyer may pay a lower price for the property. However, it’s important to note that the overall cost to the seller may still be the same, as they are essentially making up for the concession in a different way.

For example, if a seller reduces the price of a property by $10,000 as a concession, the buyer may only pay $350,000 instead of the original asking price of $360,000. However, the seller may have initially listed the property at a higher price to account for the possibility of concessions, so their net proceeds from the sale remain relatively consistent.

3. Who typically benefits from concessions in real estate?

Concessions can be beneficial to both buyers and sellers in real estate transactions. For buyers, concessions can make a property more affordable and help with upfront costs, such as closing costs. Buyers may also benefit from concessions that include additional items or upgrades included in the sale.

On the other hand, sellers can benefit from concessions by attracting more potential buyers. Offering concessions may make a property stand out among other listings, increasing the chances of a quick sale. Additionally, concessions can help sellers negotiate a higher sale price or facilitate a smoother transaction by addressing potential hurdles, such as a buyer’s financing or appraisal issues.

4. How are concessions negotiated in a real estate transaction?

Concessions in real estate are typically negotiated during the offer and counteroffer process. Buyers may include specific requests for concessions in their initial offer, such as asking the seller to cover a portion of the closing costs or include certain appliances in the sale. Sellers can then consider these requests and either accept, counter, or reject them.

It’s important for both buyers and sellers to communicate their needs and priorities during the negotiation process. Buyers should consider their budget and what concessions would be most beneficial to them, while sellers should assess the potential impact of concessions on their net proceeds and the overall market conditions.

5. Are concessions common in real estate transactions?

Yes, concessions are relatively common in real estate transactions, although their prevalence may vary depending on market conditions and the specific property. In buyer’s markets, where there are more properties available than active buyers, sellers may be more inclined to offer concessions to attract buyers and stand out among the competition.

In contrast, in seller’s markets or during periods of high demand, buyers may have less negotiating power, and concessions may be less common. However, even in these situations, concessions can still be negotiated depending on the circumstances.

In real estate, a concession refers to a negotiation between a buyer and seller where the seller agrees to certain terms or conditions to facilitate the sale of the property.

This could include things like the seller covering closing costs, making repairs, or lowering the price of the property. Concessions are a way to reach a mutually acceptable agreement and can be an important part of the buying and selling process in real estate.

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