What are concessions in real estate transactions?

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Understanding Real Estate Concessions

A real estate concession is a cost, credit, or accommodation that one party agrees to give the other during a transaction in order to move a deal forward. Concessions are commonly negotiated as part of an offer and can significantly affect the final terms of a sale.

The most common types of concessions include:

Seller-paid closing costs — the seller agrees to cover some or all of the buyer’s closing costs
Repair credits — instead of completing repairs before closing, the seller offers a credit so the buyer can handle them after taking ownership
Price reductions — a direct reduction in the sale price, often used in place of other concessions
Rate buydowns — the seller contributes funds toward reducing the buyer’s mortgage interest rate

Understanding how concessions work gives both buyers and sellers more flexibility when structuring a competitive offer, especially in a multiple-offer or auction environment.

Concessions in a Real Estate Auction Setting

At a real estate auction, concessions often take on a different role than in a traditional sale. Because auctions frequently involve multiple aggressive bidders competing for the same property, concessions can be used strategically to strengthen a bid without necessarily raising the offer price itself.

Aggressive Bidding Strategies

We define several aggressive bidding strategies used in real estate auctions:

Max Bidding Tool — a tool that automatically increases your bid up to a set maximum, without requiring you to manually respond to each competing offer

High Opening Bid — entering the auction with a strong initial offer to discourage lower competing bids

High Bid Increase (Jump Bids) — increasing your bid by a larger increment than the minimum required, signaling strength to other bidders

Short Acceptance Deadline with Collectable Funds at Bid Award — structuring your offer with a fast closing timeline and readily available funds, which can make your bid more attractive to a seller even if it isn’t the highest

If ending the bidding process quickly is your goal as a buyer, submit your highest and best offer as soon as possible. Place your bids with the auctioneer promptly, since hesitation can cost you the property in a competitive auction setting.