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3 min read Apr 20, 2023

What is Seller Credit in Real Estate?

Seller credit mean seller concessions that home sellers usually offer to close on their homes quickly. A seller credit can be in the form of repairs, warranty money or promise to pay some of the closing costs a buyer has to pay.

In 2022, 20% sellers offered seller credits as a negotiation tactic and entice buyers to make the purchase.

What is Seller Credit When Buying a House?

Seller credits is the cash a buyer receives from the seller at the time of closing. Sellers use seller credits as a negotiation tactic to ensure that the home sale happens.

Typically, seller credits are used to pay buyer’s closing costs.

How do Seller Credits Work?

There are a couple of ways in which seller credit works:

  1. Repair Credits: During a home inspection, an inspector may identify significant issues in your property. Instead of making these repairs to ensure the home sale happens, you can offer the buyer an equivalent amount in “repair credits.”
  2. Pay Warranty: This form of seller credit is serves as a bonus when you want sell your house fast. This seller credit is an incentive for buyers to purchase the property confidently. Usually, sellers offer to pay the policy’s equivalent amount to the buyer at closing.
  3. Entice Prospective Buyers: If you list your property on MLS, but don’t have any offers, then you can offer seller credits to sweeten the deal without decreasing the home value. Instead of lowering the asking price and making the buyer suspicious about the property, this can serve as a good alternative to entice potential home buyers.

What Can Seller Credits be Used for?

Seller credits can be used for incentivizing buyers to make an offer on your home.

Usually, seller’s credits are common when the housing market is leaning towards the buyer, i.e. a buyer’s market.

Can Seller Credit be Used for Down Payment?

No, you cannot use seller credits for down payment. Down payment is the amount a home buyer pays to the lender upfront to prove their credibility. It doesn’t make any sense to use seller credits for this purpose.

In fact, mortgage lenders have certain restrictions on the different types of seller’s credits and how they can be used.

Frequently Asked Questions

Is seller credit to buyer tax deductible?

Yes. A seller's credit is a sales expense the home seller encounters when selling a house. So, it is tax-deductible.

What is a seller credit in real estate?

Seller credits are concessions to incentivize buyers to make an offer on your home. Home sellers use seller credit as a negotiation tactic.


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