In almost every El Paso real estate transaction, the question of seller concessions comes up. A seller concession is a credit from the seller toward the buyer's closing costs, and it is one of the most powerful negotiation tools in real estate. For sellers, understanding how concessions work — and knowing when to offer them versus when to hold firm — can mean the difference between a closed deal and a listing that languishes on the market.
How Seller Concessions Work
A seller concession is an agreement where the seller credits a portion of the sale proceeds toward the buyer's closing costs. Instead of the buyer paying all closing costs out of pocket, the seller effectively absorbs some of those costs by reducing their net proceeds. The concession is documented in the purchase contract and disbursed by the title company at closing.
For example, if a home is under contract for $260,000 and the seller agrees to a $6,000 concession toward the buyer's closing costs, the seller nets $254,000 before their own closing costs and commissions. The buyer benefits by needing $6,000 less cash at the closing table. The home still sells at $260,000 for appraisal and recording purposes — the concession is a separate line item on the settlement statement.
Concession Limits by Loan Type
Each loan type has maximum allowable seller concessions set by the lending guidelines. Exceeding these limits will cause the loan to be denied, so both parties need to know the rules.
- Conventional loans: Seller concessions are limited to 3% of the sale price if the buyer puts down less than 10%, 6% for down payments of 10-25%, and 9% for down payments above 25%.
- FHA loans: Seller concessions are capped at 6% of the sale price. FHA is common among first-time buyers in El Paso who are using low down payment options.
- VA loans: Seller concessions are limited to 4% of the sale price. Since VA loans are prevalent near Fort Bliss, this is a critical number for El Paso sellers to know.
- USDA loans: Seller concessions can be up to 6% of the sale price. USDA loans are available in some rural areas around El Paso.
When to Offer Concessions
Concessions are most useful when your buyer is cash-constrained. Many El Paso buyers — particularly first-time buyers using FHA loans and military families using VA loans — have enough income to qualify for a mortgage but limited savings for closing costs. A concession can be the difference between a buyer who can close and one who cannot.
Strategically, offering concessions can also help you maintain your sale price. If a buyer asks you to drop the price by $5,000, consider instead keeping the price firm and offering a $5,000 concession. You net the same amount, but the higher sale price benefits the appraisal (since future comps are based on sale prices, not net-of-concession amounts) and may protect your neighborhood's property values.
When to Resist Concessions
Not every concession request should be accepted. If you have multiple offers, you have leverage to reject or reduce concession requests. If the concession combined with your other closing costs would erode your net proceeds below an acceptable level, it may be better to counter or wait for a stronger offer. Also be cautious about agreeing to large concessions that push close to the loan type limit — if the appraisal comes in low, there may not be room for both a price adjustment and a concession.
Concessions and Your Net Sheet
Before agreeing to any concession, run the numbers. Your net sheet should account for the sale price minus the concession, your own closing costs (title policy, prorated taxes, any agent commissions), and your remaining mortgage payoff. A concession that looks small on paper can feel significant when stacked on top of your other costs. ProGen Real Estate provides sellers with a detailed net sheet so you always know exactly what you will walk away with at closing.
For a full breakdown of seller closing costs in Texas, see our <a href='/blog/closing-costs-texas-el-paso-sellers'>closing costs guide</a>. Understanding the full picture of your costs — including potential concessions — is the foundation of a smart selling strategy. If you want to maximize your net proceeds, <a href='/get-started'>list with ProGen</a> and keep more equity in your pocket.