What is a seller concession (credit) and how does it affect the borrower's cash to close?

• A. The lender credits the borrower after closing; has no effect on cash to close.
• B. A seller agrees to pay a portion of closing costs; reduces borrower's cash required at closing.
• C. The borrower pays reduced rate; increases cash to close.
• D. The seller reduces sale price; always increases cash to close.

Answer: (B)

A seller concession is a credit from the seller toward the buyer’s closing costs. Because part of those costs is covered by the seller, the borrower’s cash needed at closing (cash to close) is reduced. The sale price and the loan amount don’t change because of this credit; it’s simply shifting part of the closing costs from the borrower to the seller. Lenders usually cap how much can be credited based on the loan type and the loan-to-value ratio, so the exact reduction depends on the program.