In the world of Brooklyn real estate transactions, negotiations are paramount. Buyers and sellers often engage in a delicate dance to reach an agreement that satisfies both parties. One of the key terms you may encounter during these negotiations is a “concession.” But what exactly does it mean in the realm of real estate?

A concession, in the context of real estate, refers to a benefit or incentive provided by one party to another during the course of a property transaction. These concessions can take various forms and are typically offered by either the seller to the buyer or vice versa. Understanding concessions is crucial for both buyers and sellers as they can significantly influence the terms of the deal.

Here’s a closer look at the different types of concessions and how they impact real estate transactions:

1) Seller Concessions

• Closing Cost Assistance: One common form of seller concession involves the seller offering to cover a portion or all of the buyer’s closing costs. This can be particularly appealing to buyers who may be cash-strapped after making a down payment. A typical seller concession in Brooklyn is 3-5% of the purchase price.
• Repairs or Upgrades: Sellers may agree to make certain repairs or upgrades to the property as part of the negotiation process. This can range from minor fixes to major renovations depending on the condition of the property and the preferences of both parties. In our experience, here in Brooklyn most homeowners are not willing to make any repairs, but they generally are open to offering a credit or discount in lieu of major issues.
• Price Reductions: In some cases, sellers may agree to reduce the purchase price of the property to sweeten the deal for potential buyers. This can be a strategic move in a competitive market or when the property has been on the market for an extended period.

2) Buyer Concessions

• Request for Repairs: Buyers may request that the seller address certain issues identified during the inspection process before closing the deal. This could include anything from plumbing repairs to roof replacements. As mentioned before, most homeowners in Brooklyn will likely not be open to doing repairs, but you may be able to negotiate a discount or credit if so.
• Home Warranty: Buyers may ask for the seller to purchase a home warranty, which provides coverage for major systems and appliances in the home for a specified period after the sale. This can offer buyers peace of mind against unexpected repair costs. This is pretty uncommon in Brooklyn, but some sellers may have transferrable warranties that a buyer can ask for.
• Price Credits: Instead of asking for repairs, buyers may negotiate for a credit towards the purchase price of the home to account for any necessary repairs or upgrades they plan to undertake themselves after closing. This is pretty common in Brooklyn, especially when there are issues that need to be addressed immediately.

It’s important to note that concessions are not always a given in real estate transactions. Whether or not concessions are offered and accepted depends on various factors including market conditions, the motivation of the parties involved, and the specific circumstances of the transaction.

For sellers, offering concessions can make their property more attractive to potential buyers, particularly in a competitive market where multiple offers are common. On the other hand, buyers can use concessions to their advantage by negotiating for terms that align with their needs and financial situation.

However, it’s crucial for both buyers and sellers to approach concessions with caution and to carefully consider the potential implications. For sellers, offering too many concessions could eat into your profits, while buyers should be mindful of not overextending themselves financially by asking for too much. When you’re planning to negotiate any concessions, make sure you have a good agent with a lot of experience because they’ll be able to navigate you through the process.

s you can imagine concessions play a significant role in Brooklyn real estate transactions, serving as a tool for negotiation and compromise between buyers and sellers. Understanding the different types of concessions and how they can impact the terms of a deal is essential for navigating the complex world of real estate transactions effectively. By leveraging concessions strategically, both buyers and sellers can work towards achieving their respective goals in a property transaction.