VA LOAN CAPTAIN BLOG & Learning Center

When Too Much is Too Much

By: Grant Moon 01/06/14 07:41 am

When Too Much is Too Much

All real estate is local. That means just because the national average home price is one amount, that may not apply to the area where you live. Your market is completely depending upon the buyers and sellers in your area. Even certain neighborhoods in the very same town can have different buying and selling statistics. In a hot market, homes sell at or near the original listing price, have multiple offers and don’t stay on the market very long.

When the market isn’t so hot, or downright slow, homes stay listed longer than hoped for and sell for less than an ideal amount. To speed up the selling process, a seller can provide certain “perks” to the buyer as a buying incentive. Most often, it’s by way of seller concessions.

A seller concession can be anything that provides a benefit to the buyer, as long as the concession complies with VA guidelines. A fence may be repaired or the driveway paved in order to arrive at an acceptable offer. Or if the seller doesn’t want to make any minor repairs nor reduce the sales price, the seller can offer to pay for the buyer’s closing costs. Any allowable closing cost the veteran might typically pay can be paid for by the seller, saving the buyer money.

The VA guidelines on seller concessions are based upon a percentage of the loan amount and are restricted to four percent of the sales price. For example, if the home sells for $100,000, the seller can pay for up to $4,000 of the buyer’s closing costs, including all or part of the funding fee. Anything above that amount and the VA lender can reduce the sales price of the home accordingly. Seller concessions are okay, as long as they fit the four percent rule.


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