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Kudos to Jeff Kerr at Chitown Living for a terrific analysis of Seller Concessions, the negotiation tactic in which the seller agrees to take a higher sales price and, in exchange, gives the added dollars back to the buyer to help offset closing costs.

From the post:

"In Chicago, closing costs can be a big chunk of change, expecially [sic] City of Chicago Transfer Stamps.  Welcome to Chicago.  Then the question, 'We heard there is a way to roll closing costs into the purchase price.  Is this true?'  And so begins my explanation of how this works."

For a home buyer nervous about paying closing costs, Seller Concessions can be a terrific strategy to reduce the out-of-pocket expenses of buying a home.  Of course, because your purchase price is higher, the monthly mortgage payments are higher, too.

That said, it's typically preferred to finance an additional few thousand dollars as a $10-20 extra in the monthly payment than it is to spend the money up-front.  But, because the sales price is higher, the profits on the sale of the home will be reduced, all things equal.

In either case, liquid money is more valuable today than the promise of money sometime in the future.

If you want to use seller concessions for your home purchase, it is best to talk with your lender and real estate agent before putting an offer in on the home so that it can be planned for.  Just like Jeff said.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.