Is the upfront cash for closing keeping you from making a strong offer in St. Paul? You are not alone. Many buyers use seller concessions to reduce out-of-pocket costs while staying competitive. In this guide, you will learn what seller concessions are, what they can pay for, how they work with your loan, and how to structure requests that fit St. Paul norms. Let’s dive in.
Seller concessions: the basics
A seller concession, sometimes called a seller credit, is money or a specific item the seller agrees to pay for you at or before closing. You will see it written in your purchase agreement as a credit toward your costs. It shows up on the closing statement and is verified by underwriting. The credit lowers your cash to close and increases the seller’s closing costs. It does not raise your loan amount unless your lender structures it that way.
What concessions can cover
Seller concessions commonly help with several items:
- Closing costs and prepaid expenses such as insurance, property taxes, and daily interest.
- Mortgage rate buydowns, either temporary or permanent, by paying discount points.
- Repair credits when you accept the home as-is after inspection.
- Home warranties, certain HOA dues, or specific inspections or certificates required by the contract.
These credits are written clearly in the offer. For example: “Seller to credit Buyer $X at closing toward Buyer’s closing costs and prepaids.”
Program limits and lender rules
How much you can ask for and what the credit can pay for depends on your mortgage program and lender rules. FHA, VA, USDA, and conventional loans each set their own limits and definitions. Lenders may also add their own overlays on top of program rules.
- Concessions typically cannot be used for your required down payment. Down payment must come from allowed sources such as your funds or verified gifts.
- Concessions can usually pay for closing costs, prepaids, discount points, and in some cases a home warranty.
- Specific limits vary by program and your loan-to-value ratio. Always get written confirmation from your lender about what is allowed before you submit an offer that relies on a seller credit.
Common St. Paul concessions
In St. Paul offers, you will most often see credits that cover buyer closing costs and prepaid items. Rate buydowns are also popular when buyers want lower payments in the early years or for the full term. After inspection, repair credits are common when both sides prefer a simple credit instead of doing work before closing. Sellers also sometimes pay for a home warranty, a set number of months of HOA dues, certain municipal certificates or inspections, or items like radon mitigation if negotiated.
In hotter markets, sellers tend to resist credits that reduce their net. Credits are more likely when inventory is higher, a listing has longer days on market, or you offer other terms that matter to the seller.
St. Paul and Ramsey County notes
Local conditions influence how far a seller will go with concessions. Across the Twin Cities, including St. Paul, market balance swings with inventory, rates, and seasonality. Your offer strategy should match the neighborhood and timing.
- Seller disclosures: Minnesota practice uses a Seller’s Property Disclosure form. You can negotiate credits instead of repairs if both sides agree.
- Taxes, fees, and recording: Minnesota generally does not impose a statewide real estate transfer tax. Plan for recording fees and title charges that vary by county and title company. Ask a Ramsey County title company for an estimate tailored to your price and loan.
- Property tax proration and assessments: Ramsey County property taxes are prorated at closing. Special assessments must be disclosed, paid, or credited as negotiated.
- Radon and lead: Minnesota has higher radon prevalence in some areas. You may negotiate testing and mitigation credits. For homes built before 1978, federal lead-based paint rules apply, and remediation discussions may affect credits.
- Local norms: Buyers often target credits of about 2 to 4 percent of price for closing costs. The right number depends on your loan and lender caps, so verify before you write.
How to request and document
The smoother your documentation, the easier your underwriting. Start with your lender and title company, then write a clean offer.
- Ask your lender for a concession worksheet or a detailed estimate that outlines what is allowed and how the credit will reduce your cash to close.
- Request a closing cost estimate from the title company so your ask aligns with actual fees.
- State the credit clearly in the purchase agreement or an addendum with the dollar amount or percent and the intended purpose.
- Keep your financing contingency aligned with lender approval. Underwriting must permit the credit, and the appraisal must support the price.
When concessions are accepted
Concessions are most likely when sellers want speed or certainty. New construction builders often advertise incentives that cover closing costs. You may also find more flexibility on homes with longer days on market or when you offer non-monetary benefits such as flexible closing or rentback.
They are least likely in multiple-offer situations and in low-inventory hot spots where demand is intense. In those cases, consider minimizing or avoiding credits, or pair a small credit with other terms that strengthen your position.
Negotiation strategies that work
You can keep your offer competitive while still reducing cash to close. Consider these tactics:
- Offer a slightly higher price and ask for a targeted credit, as long as your lender and the appraisal support the number. Avoid matching a price bump exactly to the credit amount if it raises underwriting concerns.
- Tighten noncritical contingencies to make a credit request more attractive. Only shorten timelines if you can meet them.
- Increase earnest money to signal commitment.
- If price may change with an escalation clause, request the credit as a percent of price and state its purpose in the contract.
Examples: how credits pencil out
Use simple math to see the impact of credits on your cash to close and monthly payment.
Closing cost credit example: You buy at 325,000 and your lender estimates 7,700 for closing costs and prepaids. You ask the seller for a 7,700 credit toward those costs. Your cash to close drops by 7,700 and the seller nets 7,700 less at closing. Your loan terms and down payment remain the same.
Rate buydown example: You request that the seller pay points for a temporary or permanent buydown. The seller pays the buydown cost at closing, reducing your rate and monthly payment for the chosen period. The credit appears on your closing disclosure and must be permitted by your loan program.
Repair credit example: Your inspection identifies 4,000 in repairs. Rather than require repairs before close, you request a 4,000 seller credit at closing. The contract specifies it as a credit rather than a repair, and underwriting confirms the credit is allowed. The appraisal still needs to support the contract price.
Buyer checklist
Use this quick checklist to avoid surprises and keep your offer strong.
Before you write:
- Get a pre-approval and written confirmation from your lender about allowable seller concessions for your exact loan program.
- Request a title company estimate for Ramsey County closing costs and recording fees.
- Review neighborhood market conditions with your agent to set a realistic credit target.
When drafting the offer:
- Specify the dollar amount or percent and the purpose of the credit in the purchase agreement or an addendum.
- Consider how the request affects the seller’s net and your appraisal. Adjust other terms to keep your offer competitive.
- Include a financing contingency that aligns with lender approval of the credit if appropriate.
At underwriting and closing:
- Confirm the credit is shown correctly on the closing disclosure.
- Make sure the credit does not substitute for required down payment funds.
- Keep documentation for any gift funds or third-party contributions used with your loan.
Get local guidance
Seller concessions can be a powerful tool to lower your cash to close in St. Paul, but they work best when they match your loan rules and the current market. With clear numbers from your lender and title company, you can ask for the right amount and keep your offer competitive in the neighborhoods you love. If you want seasoned negotiation and a fast, organized process across the Minneapolis–Saint Paul market, connect with David Brandner to map out a concession strategy that fits your budget and timeline.
FAQs
What can seller concessions pay for in St. Paul?
- Typically closing costs, prepaid items, discount points for rate buydowns, repair credits, and sometimes a home warranty or agreed inspections, subject to your loan rules.
Can seller concessions cover my down payment?
- No, concessions usually cannot be used for your required down payment, which must come from permitted sources like your funds or verified gifts.
How do concessions affect the appraisal and underwriting?
- Appraisals focus on market value, not credits, and underwriters review concessions for compliance and proper disclosure on the closing statement.
How much should I ask for in seller credits?
- Many St. Paul buyers target 2 to 4 percent of price for closing costs, but the right amount depends on your lender caps and actual title estimates.
When are sellers most open to credits in St. Paul?
- You will see more flexibility with longer days on market, motivated sellers, and new construction; credits are tougher in multiple-offer situations.
How do I write a concession into my offer?
- Include clear language in the purchase agreement or an addendum stating the amount or percent and the purpose, and align it with your lender’s written approval.
Should I raise the price to get a credit?
- Sometimes a small price increase paired with a credit works if your appraisal supports the price; structure it carefully and confirm with your lender.
