What's a Seller Concession, and When Does It Make Sense to Offer One?

What is a seller concession in real estate?A seller concession is a cost, credit, or service the seller agrees to cover for the buyer as part of a negotiated transaction, separate from the sale price itself. In Riverside County home sales, the four that come up most are buyer's agent compensation, a one-year home warranty, termite inspection and Section 1 clearance, and closing cost credits. Each one affects your net proceeds differently, each loan type has its own cap on what's allowed, and none of them account for repair credits that may come later in the transaction after a home inspection.

Most sellers think about concessions as a fixed cost they'll either agree to or not. The reality is more nuanced. What you offer upfront, how much room you leave for what comes later, and how your agent handles each ask along the way can mean the difference of thousands of dollars in your final number.

Here's what each concession actually means, how to think through the limits, and where sellers most often get caught off guard.

What Is a Seller Concession, Exactly?

A seller concession is written into the purchase contract as a credit or a commitment. Your home sells for the agreed price. The concession shows up as a line item that reduces what actually lands in your pocket at closing, similar to how a commission does.

That distinction matters more than it sounds. A $10,000 price cut and a $10,000 closing cost credit can have the exact same effect on your net proceeds, but they read completely differently. A price cut becomes public record and shows up in the data that future appraisers and sellers use. A credit stays inside the transaction. The county records the full sale price either way. For a lot of sellers, that difference in optics is worth something on its own, and it's part of the conversation your agent should be having with you before you respond to any offer.

The Four Concessions Showing Up Most in Riverside County Offers

1. Buyer's Agent Compensation

The first is buyer's agent compensation. Since the 2024 NAR settlement, this is presented a little differently than it used to be. Sellers used to negotiate with their agent how much to offer a buyer's agent for their compensation. Now it's negotiated by the buyer's agent with their buyer directly, and it typically shows up in an offer as a seller concession.

What this means practically is that when an offer comes in with a line asking you to contribute toward the buyer's agent compensation, you're being asked to cover a cost the buyer has already agreed to pay their agent. Whether you do that, and how much, is negotiable. Most sellers in Riverside County still offer some level of compensation because it widens the pool of buyers who can make realistic offers. A buyer who has to pay their own agent out of pocket on top of a down payment and closing costs has a harder time getting to the table. But the amount, and whether to offer it at all, is now a strategic decision, not a default.

2. One-Year Home Warranty

A home warranty is a service contract that covers the repair or replacement of major systems and appliances when they fail due to normal wear and tear. Most standard plans cover HVAC, plumbing, electrical systems, water heaters, and major kitchen and laundry appliances including refrigerators, dishwashers, ovens, and washers and dryers. Some plans extend coverage to pools, spas, or additional systems for an added cost.

For a seller, the cost of offering a one-year warranty at closing typically runs between $300 and $600 for a standard plan in California, depending on the provider and coverage level. That's a relatively low cost compared to what it does for a buyer's peace of mind, especially in older Inland Empire homes where an HVAC system or water heater may already have some years on it. A buyer who's nervous about what they're inheriting is more likely to ask for a price reduction or push harder on repairs. A warranty can take that concern off the table before it becomes a bigger ask.

Home warranties are generally offered as part of the negotiated terms in the purchase contract, not included automatically with a listing. If a buyer asks for one and you're on the fence, it's worth running the math against what the alternative might cost you in back-and-forth negotiation.

3. Termite Inspection and Section 1 Clearance

This one is specific to California, and it's one of the more misunderstood costs in a transaction.

When a licensed pest inspector examines a home, their report separates findings into two categories. Section 1 items are active infestations or damage that has already occurred and requires immediate treatment or repair. Section 2 items are conditions that aren't currently causing damage but could lead to a problem if left unaddressed, things like wood-to-soil contact, moisture intrusion, or conducive conditions near the foundation.

Section 1 clearance is frequently required by VA and FHA lenders before a loan can close. In Southern California, the most common Section 1 findings involve drywood termites, dry rot, and deteriorating wood from chipping or peeling paint. Depending on what's found, the work could involve local spot treatments, tenting the entire home, replacing dry-rotted boards, or some combination. A basic inspection typically runs $75 to $150, while treatment and repair work can range from a few hundred dollars for a minor localized issue to several thousand or more for extensive findings. Costs vary significantly based on the vendor, the property, the type of termite involved, and the extent of the damage, so any estimate before an actual inspection is just a guess.

One question sellers often ask is whether to get a termite inspection done before listing. There are real arguments on both sides.

Getting it done early gives you time to address anything that shows up without the pressure of an open escrow and a buyer who wants answers immediately. You go into the listing knowing what you're dealing with and can price or prepare accordingly.

The tradeoff is that once you have a report in hand, you generally have a disclosure obligation for the findings, regardless of whether the buyer has formally requested a termite inspection as part of the contract. If termite clearance isn't a term in the offer, you may find yourself handing over information you had no obligation to provide, and opening a negotiation you didn't have to have.

This is a conversation worth having with your agent before you list. The right answer depends on the property, what you already know or suspect about its condition, and the likely buyer profile for your home.

4. Closing Cost Credits

A closing cost credit is an agreement where the seller contributes a dollar amount toward the buyer's closing costs at the end of the transaction. For the buyer, it reduces the cash they need to bring to the table at closing. Instead of paying those costs out of pocket, they're effectively rolling them into the transaction. For the seller, it comes out of net proceeds.

This is the concession making the biggest comeback across the Inland Empire right now, and for good reason. With rates still elevated, buyers are cash-sensitive. A closing cost credit might matter more to a buyer than an equivalent price reduction, because the credit directly reduces what they have to show up with at signing. Understanding that dynamic is part of how buyers and sellers are negotiating in the current Inland Empire market.

For a full breakdown of what closing costs actually include and what both sides typically pay, see our guide on what closing costs are in California and who pays them.

Every loan type sets its own cap on how much a seller can contribute toward closing costs, calculated as a percentage of the sale price. FHA, VA, and conventional loans all have different limits, and conventional limits scale further based on how much the buyer is putting down. Your agent and the buyer's lender are the right source for the exact numbers on any given transaction, because guidelines can change and what's allowed depends on the full structure of the deal. What matters for you as a seller is knowing that these caps exist, that they vary by loan program, and that agreeing to a number outside what the buyer's loan allows creates problems in escrow before you ever get to closing.

The Concession No One Talks About Upfront: Repair Credits

Here's where a lot of otherwise smooth transactions hit a wall.

The four concessions above are typically negotiated when the offer comes in, before you're in escrow. What happens after the offer is accepted is a separate negotiation entirely. The buyer hires a home inspector, that inspector produces a report, and then the buyer decides what to do with it. Some buyers ask for repairs to be completed before closing. Others ask for a credit so they can handle things themselves after they take possession. Either way, a repair credit request is its own concession ask, and it comes after you've already committed to whatever you agreed to in the original offer.

This is where the math can get painful. If you've already given a closing cost credit upfront, and the buyer's loan is close to its concession limit, there may not be room left to also accommodate a repair credit without restructuring the deal. In some cases, that means one party has to give somewhere else, usually on price. In others, it means the deal falls apart entirely.

Repair credit requests can range from a few hundred dollars for minor items to well over $10,000 depending on what a home inspector flags. An older home in Perris, Beaumont, or parts of Riverside can produce a list that catches sellers completely off guard if they weren't prepared for it going in.

This is exactly why the agent in your corner matters. An experienced agent knows to think several moves ahead when an offer comes in with concessions attached. They're not just looking at the credit you're being asked to give today. They're thinking about what room you need to hold for what might come after the inspection, and how to structure the initial agreement to protect you from being squeezed twice.

The Negotiation Is the Whole Game

The best concession is often the one you didn't have to give.

A seller working with an agent who reads offers carefully, understands buyer motivation, and communicates strategically with the buyer's agent is going to give away less than a seller who's simply reacting to whatever shows up on the page. There's a real cost to saying yes too quickly, and there's a real skill to knowing when to hold, when to counter, and when a concession actually closes a legitimate gap versus when it just rewards an aggressive opening ask.

Strong negotiation isn't just about the number on the table. It's about sequencing, communication, and knowing what the buyer actually needs to get to the finish line versus what they're simply testing to see if you'll agree to. A good agent knows the difference, and applies that knowledge from offer through inspection through closing. That consistency is one of the most concrete ways an experienced listing agent protects your bottom line across the full arc of a transaction.

For more on what to look for when evaluating who should represent you, see our guide on how to choose a listing agent in the Inland Empire. We'll also be publishing a dedicated breakdown of what skilled negotiation actually looks like in practice and what separates agents who protect their sellers from those who just move paperwork. [Link to negotiation article — coming soon.]

Frequently Asked Questions

Do I have to pay the buyer's agent commission as the seller?No. Since the 2024 NAR settlement, buyer's agent compensation is negotiated separately between buyers and their agents. It's no longer automatically your responsibility. Many sellers still choose to offer it because it expands the buyer pool, but it's a strategic decision, not a default cost.

What does a home warranty actually cover?Most standard plans cover major systems like HVAC, plumbing, electrical, and water heaters, along with key appliances including refrigerators, dishwashers, ovens, and washers and dryers. Coverage varies by plan and provider. As a seller, you're typically offering a one-year plan at closing that costs a few hundred dollars, which gives the buyer protection for their first year of ownership.

What is the difference between Section 1 and Section 2 on a termite report?Section 1 items are active infestations or existing damage that require immediate attention and are often required to be cleared by lenders before closing. Section 2 items are conditions that could lead to a future problem but aren't causing active damage right now. Responsibility for Section 2 work is negotiable, while Section 1 clearance is frequently a deal requirement, especially with VA and FHA financing.

Should I get a termite inspection done before I list my home?It depends on the property and your situation. Getting it done early gives you time to address findings without escrow pressure. The tradeoff is that once you have a report, you generally have a disclosure obligation for the findings, even if the buyer hasn't specifically requested an inspection as a contract term. Talk to your agent before ordering one, because the right call depends on your property, what you already know about its condition, and the likely terms of your sale.

Can a buyer ask for both a closing cost credit and a repair credit?Yes, and this happens regularly. The challenge is that loan programs cap total seller contributions as a percentage of the sale price. If you've already committed a significant closing cost credit upfront, there may be limited room left for a repair credit after the inspection without restructuring the deal. This is one of the reasons how you structure the initial offer matters as much as what you agree to.

Does offering a concession affect my recorded sale price?No. Concessions show up on the closing disclosure as deductions from your net proceeds, similar to how a commission works. The sale price recorded by the county stays at the contract price, which matters for comps, future appraisals, and your own records.

What if a buyer asks for more than their loan program allows?The request needs to be restructured before you agree to it. Exceeding the cap doesn't mean the extra comes back to you as cash, it creates a problem the lender will flag before closing. Your agent and the buyer's lender should confirm what's actually allowable before you put anything in writing.

Ready to Find Out What Your Home Is Worth?

Every offer is different, and so is every net sheet. If you're getting ready to sell in Moreno Valley, Riverside, Menifee, Perris, Beaumont, or anywhere else in the Inland Empire, call or text Chris Leeper at 951-741-5311 or visit https://linktr.ee/leeperrealtygroup. We'll run the numbers before you list, walk you through how to think about concessions before the first offer comes in, and make sure you're not giving away more than you need to at any point in the transaction.

Chris Leeper, REALTOR®, DRE #01881634. Brokered by eXp Realty of California, Inc.

This article is for informational purposes only and does not constitute legal, tax, or financial advice. Concession limits vary by lender and loan program and are subject to change. Consult your agent and lender for guidance specific to your transaction.