Seller Concessions in Today’s Market

Dear Pat,
Our elderly neighbors just sold their house after two months on the market.  They told us they got very close to their reduced asking price, but had to agree to pay the buyer’s closing costs.  Somehow it doesn’t seem right for a seller to pay costs of the buyer.  Is there something wrong here?
---Just Wondering

Dear Wondering,
No, nothing is wrong or illegal with the seller paying the buyer’s closing costs.  It’s been a common practice for years, often used to help cash-poor buyers who were willing to add the closing costs on top of the price offered on the home.  For example: an offer of  $205,000 on a house priced at $200,000, asking the sellers to pay $5000 of the buyer’s costs (which would still give the seller $200,000). 

But now we see it more often as a seller concession, with no compensation to the sale price.  In this market a seller is often willing to pick up a substantial portion of the buyer’s costs—it’s the same as agreeing to sell for less.  This is especially true if the home has been on the market for 30 days or more.  Other seller concessions that we see more frequently these days include decorating allowances, and substantial improvements or repairs (not necessarily related to safety) after the buyer’s inspection.  It really comes down to being competitive and willing to negotiate with buyers in a market full of inventory.      Naturally, if a home sells quickly there is less “give” from the seller.  Regardless of what we all read in the paper about market-time averages, many houses are candidates to sell in the first ten days if they offer at least two of the following attributes: great condition, desirable location, and market-conscious price.  Of course, the last of these is the most critical—if an otherwise worthy home is seen as too expensive, the adjustment will eventually happen in price reductions and seller concessions.