Seller Concessions: Pros our Cons?

[Joshua Lupo]

HI BP! My fiancé and I have been on the hunt for a multi family properties in or around the Albany, NY market. We have analyzed dozens of properties, submitted several offers and at this point have not yet had one accepted. We consistently go in 5-7k over asking BUT we do typically build in 6% seller concessions into the contract. My understanding is that this amount can be added to the total purchase and would allow us to wrap up most, if not all closing costs into the mortgage itself. Our realtor feels that our need for 6% seller concessions may be why some sellers have not accepted our offer despite the fact that we’re offering a fair amount more than asking. My question is why would concessions be a possible deterrent for sellers if they’re getting more money than asking? Thanks!

[Aaron K.]

Because they essentially aren't getting more money than asking even if the property were $100,000 and you offer $106,000 with 6% concession $106,000 *94% = $99,640 which is less than asking and includes more hassle for the seller.  Also I assume that these properties would be even more expensive thus making the difference even larger.