5 Rules for Seller Concessions in a Texas Contract | T. Kerr Property Group
Seller Guide · Texas

5 Rules for Seller Concessions in a Texas Contract

Seller concessions in a Texas contract are simple in principle and easy to get wrong in practice. A concession is money the seller agrees to contribute toward the buyer's costs, written into the contract and visible to the lender, the title company and the appraiser.

5 things to know T. Kerr Property Group

Here are five rules for seller concessions in a Texas contract, and what each one costs a seller who ignores it.

The five rules, in the order they come up:

The short version, in order
01Put the concession in the contract 02Lenders cap what a seller can contribute 03Appraisers adjust for disclosed concessions 04Never keep a concession off the file 05Compare a concession to a price cut
01

How does a seller concession actually get written into a Texas contract?

A seller concession is a written term of the contract, not a side agreement. The parties name a dollar amount the seller pays toward the buyer's expenses, and that amount travels with the contract to the lender and the title company. Across the market, buyers have been regaining leverage, and concessions have become a common way to compete without cutting the headline price.

What a strong answer sounds like

A good answer shows the executed contract with the amount filled in, and says exactly what the money can be spent on. Closing costs, prepaid items, a rate buydown, or a mix of those. A seller should also see how the amount lands on the closing statement before agreeing to it.

Red flag

An agreement made by text message or over the phone with nothing amended. If the concession is not in the signed contract, the title company has no instruction to follow and the lender has nothing to approve.

02

Why does the lender cap how much a seller can pay?

Lenders cap seller contributions because an unlimited credit could hide the true price of a home. A seller who pays a large share of the buyer's costs is effectively lending the down payment back, which raises the risk on the loan. Every program sets its own limit, and that limit shifts with the loan type and the down payment.

What a strong answer sounds like

A good answer comes from the buyer's loan officer in writing before the number is agreed. What the cap is for this exact program and this down payment, and what happens to any amount above it. Money above the cap is usually lost rather than returned to the seller.

Red flag

An agent who names a percentage from memory. Caps differ across loan programs and move with the down payment, so a figure remembered from another deal can break this one. Confirm it with the lender in writing.

03

Does an appraiser count a seller concession against the price?

An appraiser reads a disclosed concession as part of the price. A home that closed at full price with a large credit toward the buyer's costs effectively sold for less, and the appraiser adjusts for that when comparing it to other sales. One generous concession can pull down the comps for a whole street.

What a strong answer sounds like

A good answer looks at which nearby closings carried concessions before the list price gets set. In the new build sections around Georgetown, builder credits and rate buydowns are common. A resale seller is often competing against a neighbor's closed sale that carried one.

Red flag

Being told the appraiser will not notice. Concessions are reported with the sale, and appraisers ask about them directly. Planning around the hope that a number stays hidden is not a plan.

04

What happens if a concession is kept off the paperwork?

Keeping a concession off the contract misstates the transaction to the lender. A lender approves a loan based on the price and the terms it is shown, so an undisclosed credit means the file is wrong. Everyone signing the closing statement is then certifying figures they know are incomplete. That is a serious problem, not a technicality.

What a strong answer sounds like

A good answer puts every dollar moving between the parties on the settlement statement. Repairs paid outside closing, credits, and anything promised in a side letter all belong in the file. A licensed attorney is the right person to confirm the exposure before anyone agrees to something unusual.

Red flag

An agent who suggests handling part of it outside closing so the lender does not see it. That is advice to misrepresent the deal. Treat it as a reason to ask what else that agent is comfortable leaving out.

05

Is a concession better than cutting the price?

A concession and a price cut can cost a seller the same dollars while reaching different buyers. A price cut moves the home into a lower search bracket, where more buyers see it at all. A concession keeps the search position and solves the cash problem for a buyer who is short at closing rather than short on payment.

What a strong answer sounds like

A good answer runs both versions side by side with net proceeds attached. In Georgetown, Round Rock and Liberty Hill, where T. Kerr Property Group works with relocation buyers, the real question is whether a buyer is short on cash at closing or short on monthly payment. Those two problems need different fixes.

Red flag

Offering a concession on a home that has sat for months with no showings. A concession helps a buyer who already wants the house. When nobody is touring, the search bracket is the problem, and only a price change moves that.

This article is general information about the Central Texas market and is not legal, tax or financial advice. Statutes, exemptions and district rules change. Confirm anything that affects a decision with a licensed attorney, a tax professional or the Williamson Central Appraisal District before acting on it.

Common Questions

Frequently asked questions.

What is a normal seller concession in Texas?

There is no standard amount. What gets agreed depends on the buyer's loan program, the cap that program sets, and how much competition the home faces. Texas has no state transfer tax and no state income tax, so a buyer's closing costs here differ from what they paid in other states. Ask the lender for the cap before naming a number.

Do seller concessions reduce the sale price on the record?

The recorded sales price stays what the contract says, but the concession is reported with the sale. Appraisers and agents pulling comparable sales can see both numbers. The effective price is what the market reads, which is why a large concession behaves much like a price cut. A top real estate agent in Georgetown should show both versions before a seller picks one.

Can a seller concession pay for repairs?

Sometimes, and it depends on the lender. Many programs allow a credit toward closing costs and prepaid items while restricting credits for repairs. A repair credit outside those rules can be refused in underwriting days before closing. Get the intended use approved in writing before it goes into the contract.

Are concessions more common in a buyer's market?

Yes. When buyers have choices, they ask for help with costs before they ask for a lower price, because a credit solves the cash problem at closing. Across the market, 42.1 percent of properties recorded a price reduction, and concessions tend to move in the same direction as cuts.

Can a concession be added after the option period ends?

It can, when both sides sign an amendment. The TREC termination option sits at Paragraph 23, where a buyer pays an option fee for an unrestricted right to terminate for a negotiated number of days. Once those days are gone, a buyer asking for a concession is asking rather than demanding, and the seller can decline.

Talk It Through

Run the concession and the price cut side by side

T. Kerr Property Group is a residential real estate team serving Georgetown, Round Rock, Liberty Hill and the wider Williamson County market. Sellers comparing Georgetown realtors before a listing can have both versions priced out, with net proceeds, lender caps and the appraisal effect written down before anything gets signed.

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