Wondering if a seller credit could make your La Puente deal work without dropping the price? You are not alone. Buyers want help with upfront costs, and sellers want a smooth closing with a strong net. The right concession can bridge both goals when it fits the loan rules and local customs. In this guide, you will learn what seller concessions are, how they affect a seller’s net proceeds, program limits, and when they can strengthen an offer in La Puente. Let’s dive in.
What seller concessions mean in La Puente
A seller concession is a payment or credit from the seller that helps cover the buyer’s costs at closing. It must be disclosed to the lender and show up on the Closing Disclosure or settlement statement. For a plain-language overview of closing costs and who pays what, see the CFPB’s consumer guide to closing. You can review the CFPB’s closing costs and process overview.
Common concession types
- Closing-cost credit. A set dollar amount the seller contributes toward the buyer’s lender fees, escrow charges, title fees, and permitted prepaids like taxes and insurance. Lenders require this to be documented and shown on the final Closing Disclosure.
- Rate buydown credit. The seller funds discount points or a temporary buydown, such as a 2-1 or 1-0, to reduce the buyer’s interest rate for a set period. This must be acceptable to the buyer’s lender and documented. For policy references, see the Fannie Mae Selling Guide and the Freddie Mac Single-Family Guide.
- Repair credit in lieu of repairs. Instead of doing repairs before closing, the seller credits the buyer a negotiated amount at close. Lenders often allow this, but required health or safety repairs usually must be completed before closing rather than credited. Review FHA policy via HUD’s Single Family Housing resources.
- Price adjustment. Sometimes parties agree to lower the price and also use a credit. This affects loan-to-value and the appraisal differently than a separate credit. Coordinate with the lender before you choose a structure.
Key points to remember
- All concessions must be disclosed and appear on the settlement statement.
- Loan programs limit how much a seller can contribute and what those funds can pay.
- Some repairs, especially health or safety items, must be completed before closing and cannot be satisfied only with a credit.
How concessions change a seller’s net
Before you offer a credit, run the math. Here is a simple way to think about your net proceeds at closing.
Net proceeds formula
Seller Net = Sale Price
- Seller Concessions (credits)
- Real Estate Commissions
- Seller’s Loan Payoffs
- Escrow, Title, and Transfer Fees (seller portion)
- Prorations (property taxes, HOA dues)
- Other Seller Obligations (recording fees, assessments)
= Estimated Cash to Seller at Closing
Example
- Sale price: 700,000 dollars
- Seller concession: 10,000 dollars
- Commission at 6 percent: 42,000 dollars
- Seller mortgage payoff: 200,000 dollars
- Escrow, title, and other seller fees: 4,000 dollars
- Prorated taxes and HOA: 1,000 dollars
- Estimated Seller Net: 700,000 minus 10,000 minus 42,000 minus 200,000 minus 4,000 minus 1,000 = 443,000 dollars
This is a basic illustration. Actual splits vary by contract, lender, and escrow instructions. If you pair a price change with a credit, remember it can affect the appraisal and loan-to-value. Coordinate early with the lender and appraiser through escrow.
Program rules that cap credits
Seller concessions are capped by loan program and sometimes by the buyer’s down payment and occupancy type. Lender overlays can be stricter than these guides, so always confirm with the buyer’s specific lender before you write the offer.
Conventional (Fannie Mae and Freddie Mac)
Typical maximum seller concessions vary with down payment on primary residences:
- About 3 percent when the buyer puts less than 10 percent down.
- Up to about 6 percent when the buyer puts 10 to 24.99 percent down.
- Up to about 9 percent when the buyer puts 25 percent or more down.
These limits can differ for second homes or investment properties, and policies can change. Review agency references and confirm with the lender using the Fannie Mae Selling Guide and Freddie Mac’s Guide.
FHA
FHA generally allows seller contributions up to 6 percent of the lesser of the purchase price or appraised value toward closing costs, prepaids, discount points, and buydowns. Some repairs, especially safety or habitability items, must be completed before closing rather than credited. See HUD’s Single Family Housing resources.
VA
VA loans have their own rules for what sellers can pay and how concessions are defined. This includes certain fees, bonuses, and buydown structures that are allowed within program limits. Buyers using VA financing should confirm details with a VA-approved lender. Explore the VA’s home loan program overview.
USDA
USDA loans typically allow seller concessions up to 6 percent toward eligible buyer costs. Exact limits can depend on underwriting and lender overlays. Buyers should confirm with their USDA lender before relying on a credit.
Lender overlays
Many lenders set tighter limits than the agencies, or they restrict how buydowns and repair credits may be used. Get written guidance from the buyer’s lender before you finalize terms.
Smart ways to use concessions in La Puente
- Help with cash to close. A closing-cost credit can turn a solid pre-approval into a stronger offer without cutting price.
- Ease payment shock. A temporary buydown can lower monthly payments for the first 1 to 3 years. This can matter when rates feel high.
- Solve repair friction. A repair credit can keep timing on track when the seller prefers not to coordinate contractors before closing. Confirm lender and appraiser requirements first.
- Balance price and terms. In a balanced market, a modest seller credit can make a slightly lower-price offer more appealing if the timing and contingencies are clean. In a hot market, sellers may prefer a higher price and fewer credits.
Offer and contract language tips
Be clear on the amount, purpose, and how the credit will appear on the Closing Disclosure. Confirm the credit is subject to lender approval and program limits. If you use the California Association of Realtors Residential Purchase Agreement, align your terms with the form and your broker’s instructions. Learn more about state-level practices via the California Association of Realtors.
Sample phrasing you can adapt
- Closing-cost credit:
- “Seller agrees to credit Buyer $[amount] at closing toward Buyer’s closing costs, prepaids, and lender-required charges. This credit shall be shown on the final Settlement Statement or Closing Disclosure. The credit is subject to lender approval and shall not increase Seller’s net obligations beyond the stated amount.”
- Rate buydown:
- “Seller agrees to contribute up to $[amount] to fund a temporary or permanent interest rate buydown. Payment will be made per lender requirements and documented on the Closing Disclosure. Any unused buydown funds shall remain Seller’s property.”
- Repair credit in lieu of repairs:
- “Seller will credit Buyer $[amount] at closing in lieu of Seller completing the agreed repairs. If the lender or loan program requires specific repairs before closing, Seller will complete those items at Seller’s cost prior to funding.”
- Price plus credit combination:
- “Purchase price $[amount]. Seller to credit Buyer $[amount] toward Buyer’s closing costs. If the lender disallows any portion of the credit, the parties agree to reduce the credit to the allowable amount, and Buyer will pay the remainder.”
Local closing costs to check in Los Angeles County
- Title and escrow customs. In Southern California, sellers often pay the owner’s title policy. Escrow fees are commonly split. These are customs, not rules, and they are negotiable. Ask your escrow officer and review contract terms.
- Transfer taxes and recording fees. Confirm whether any city or county transfer taxes apply to your property. Check with the City of La Puente’s official site and your escrow officer before you finalize net sheets.
- Property tax proration and special assessments. California property tax includes the base rate and may include parcel taxes or Mello-Roos. Taxes are prorated to the day of closing. To verify assessments or special taxes, search the Los Angeles County Assessor’s site at the Los Angeles County Assessor.
- HOA-related items. For condos or townhomes, HOA transfer or move-in fees and any capital contributions should be addressed in the offer. Lenders may require HOA documents and estoppel statements.
- Timeline and coordination. Concessions must be aligned across lender, escrow, and the appraisal. Communicate terms early so the Closing Disclosure is accurate and no funds are left unused.
Quick checklists
For buyers
- Get a lender pre-approval that states your maximum allowable seller contributions and which costs are eligible.
- Decide whether a closing-cost credit or a rate buydown gives you more value over your time horizon.
- If you want a repair credit, confirm with your lender whether any items must be fixed before closing.
- Keep an eye on appraisal and LTV. A credit does not solve a low appraisal.
For sellers
- Use the net proceeds formula and include the proposed credit to see the real impact on your bottom line.
- Compare offers that include credits versus price reductions. Sometimes a credit closes faster and nets more.
- Confirm with your listing agent and escrow who pays for title, escrow, and transfer costs in your area.
- Make sure the offer language spells out the credit amount, how it will be used, and that it is subject to lender approval.
For both sides
- Put the concession terms in the purchase agreement and make sure they appear on the Closing Disclosure.
- Verify program-specific limits for Conventional, FHA, VA, or USDA with the buyer’s lender.
- Coordinate early with escrow to ensure clean paperwork and on-time closing.
Bring it home
Seller concessions are a practical tool in La Puente when you use them within program limits and local customs. They can help buyers manage upfront costs and help sellers attract stronger offers without always cutting price. The key is clarity, lender alignment, and honest math on net proceeds.
If you want help structuring a credit or buydown for your La Puente sale or purchase, reach out. We will run the numbers, tailor language to your goals, and coordinate with your lender and escrow so nothing falls through the cracks. Connect with Andrea De La Rosa to get started.
FAQs
What are seller concessions in La Puente real estate?
- They are seller-paid credits or payments that reduce a buyer’s cash to close, such as closing-cost credits, rate buydowns, or repair credits, and they must be disclosed on the Closing Disclosure.
How do concessions affect a seller’s net proceeds in Los Angeles County?
- A concession is subtracted from the sale price along with commissions, payoffs, fees, and prorations, so it lowers the cash the seller receives at closing.
What is a seller-paid rate buydown and how does it work?
- The seller funds discount points or a temporary buydown like 2-1 to lower the buyer’s rate for a period, subject to lender rules and documentation on the Closing Disclosure.
Can a repair credit replace lender-required repairs on FHA or VA loans?
- Often no, because health or safety repairs usually must be completed before closing under program rules, so confirm requirements with the lender and references like HUD’s FHA guidance.
What are the conventional loan limits for seller credits?
- Typical caps are about 3 percent with less than 10 percent down, up to 6 percent with 10 to 24.99 percent down, and up to 9 percent with 25 percent or more down, subject to lender confirmation.
Who usually pays title insurance and escrow fees in Southern California?
- It is common for the seller to pay the owner’s title policy and for escrow fees to be split, but these are customs that can vary and are negotiable in the contract.
How can I verify transfer taxes and special assessments in La Puente?
- Check the City of La Puente’s official site for local fees and use the Los Angeles County Assessor’s site to review property taxes and any special assessments.
Can a seller credit solve a low appraisal in a La Puente deal?
- No, a credit cannot raise an appraised value or allow an LTV above program limits, so you may need a price change, more cash from the buyer, or a different structure if the appraisal comes in low.
