How do seller concessions work in Salt Lake City?
A seller concession is money the seller agrees to put toward the buyer's costs instead of dropping the price. In Salt Lake City's current market, that usually means covering part of the buyer's closing costs, funding a mortgage rate buydown, or crediting money for repairs. Concessions typically run 1% to 3% of the purchase price, they're written into the Utah REPC as part of the offer, and how much a seller can pay is capped by the buyer's loan type. In many cases a concession helps a buyer more than an equivalent price cut, because it can lower the monthly payment or the cash needed at closing.
By David Lawson | July 3, 2026
If you're buying or selling along the Wasatch Front right now, "seller concessions" is one of the phrases you'll hear most at the negotiating table. Inventory has loosened to roughly two and a half to three months of supply across the Salt Lake valley, homes are taking around a month to sell, and a large share of Utah listings are closing below their original asking price. Buyers have real negotiating room again for the first time in years.
Here's the part most people miss: the smartest ask often isn't a lower price. It's the right concession. Let's break down what a concession actually is, the three forms it usually takes, and how to decide which one fits your situation.
The three levers: credit, buydown, or price cut
When a seller agrees to "help" a buyer, that help almost always shows up as one of three things. They sound similar, but they solve different problems.
1. A closing-cost credit. The seller pays a set dollar amount toward the buyer's closing costs—lender fees, title and escrow charges, prepaid property taxes and insurance, and the like. On a Salt Lake City purchase, buyer closing costs typically land somewhere around 2% to 5% of the price, so a credit of 1% to 3% can wipe out a big chunk of the cash a buyer needs on closing day. This is the lever to pull when a buyer is stretched on cash to close rather than on monthly payment.
2. A mortgage rate buydown. Instead of handing over cash, the seller funds an escrow that lowers the buyer's interest rate—either for the first couple of years (a temporary buydown) or for the life of the loan (a permanent buydown, paid for with discount points). The most common version is the 2-1 buydown: the rate drops two percentage points in year one, one point in year two, then settles at the full note rate. A seller-funded buydown usually costs somewhere in the range of 1.5% to 2.5% of the loan amount.
3. A price reduction. The seller simply lowers the number on the contract.
The mistake I see buyers and sellers make is treating these as interchangeable. They're not. A price reduction solves a visibility problem—if a home isn't getting showings, the price is scaring buyers off before they walk in. A concession solves a conversion problem—the home is getting traffic, but interested buyers need help making the payment or the cash work. Diagnose which problem you actually have before you decide.
Which concession should you actually ask for?
Say you're looking at a $550,000 home in Sugar House or the southwest valley and the seller is willing to give up about $12,000 either way. Here's how the same money plays out differently.
- Take it as a price cut and you'd finance roughly $11,000 less. At today's rates—hovering around 6.3% to 6.5% in early July 2026, though you'll want your lender's exact quote—that trims your payment by only about $65 a month. Real, but small.
- Take it as a rate buydown and that same money can knock two full points off your rate in year one. On a loan around $495,000, that's the difference between a payment built on roughly 6.4% versus 4.4%—hundreds of dollars a month in near-term relief while you settle into the home.
- Take it as a closing-cost credit and you keep that $12,000 in your pocket at closing, preserving reserves for a move, furnishings, or a first-year repair.
A few honest rules of thumb we walk our clients through:
- Ask for the buydown if your income is likely to grow, you expect to refinance if rates ease, or you just need breathing room on the payment in the early years.
- Ask for the closing-cost credit if your reserves are thin after the down payment, or you already plan to refinance within a year or so (in which case a permanent rate reduction won't have time to pay off).
- Ask for the price cut if you plan to stay put for many years without refinancing—over a long horizon, a lower loan balance quietly compounds—or if the appraisal is the real constraint (more on that below).
There's no universally "best" answer. The right lever depends on your loan, your cash position, and how long you plan to own. That's exactly the kind of math a good agent and lender should run with you before you write the offer.
The cap your loan type puts on concessions
Here's a detail that trips people up: the seller can't just pay whatever they want. Mortgage guidelines limit seller-paid concessions, and the ceiling depends on the buyer's loan and down payment.
- Conventional loans: roughly 3% of the price with less than 10% down on a primary residence, 6% with 10% to 25% down, and up to 9% with more than 25% down. Investment properties are usually capped near 2%.
- FHA loans: up to 6% of the price.
- VA loans: a 4% cap on "concessions" like a rate buydown or prepaids, though sellers can still pay a buyer's standard closing costs on top of that.
- USDA loans: up to 6%.
One more limit applies across the board: a concession generally can't exceed the buyer's actual allowable closing costs. You can't turn leftover concession money into cash back at the table. If a seller agrees to more than the costs absorb, the extra typically has to be restructured—often as a rate buydown or a price reduction instead.
Two Utah-specific wrinkles worth knowing
The appraisal can shrink the room. Concessions are baked into the contract price, and the lender still needs the home to appraise. If you negotiate a high price with a fat concession and the appraisal comes in below that number, the financing math tightens fast. This is the same dynamic that plays out when an appraisal comes in low in Utah—the lender finances against the lower of price or appraised value, and your concession room is measured against that value, not your optimism.
Utah keeps closing simpler than most states. There's no real estate transfer tax here, and a title company (not an attorney) handles the settlement and escrows the funds. Concessions are written directly into the Real Estate Purchase Contract—usually as a seller-paid-costs line—and settled through the title company at closing. If repairs come up during Utah's due diligence period, a repair credit is just another form of concession you can negotiate rather than asking the seller to swing a hammer before closing.
New construction plays by its own rules
If you're shopping the fast-growing southwest valley—Daybreak, Herriman, South Jordan, Saratoga Springs—builder incentives are their own category of concession, and right now they're aggressive. Builders have been leading with rate buydowns (including 3-2-1 structures), finished-basement offers, and preferred-lender credits, sometimes advertising combined savings well into the tens of thousands. Utah's S.B. 240 program can layer on up to $20,000 toward a down payment, closing costs, or a permanent buydown on qualifying new homes priced at or below $450,000.
The catch: builders usually protect their headline price because it sets the comps for the rest of the community, so they'd rather give you rate relief and upgrades than cut the number. That's not a bad thing—it often means more total value—but it changes how you negotiate. Weigh the incentive package against what an existing home a few blocks away would cost with a straight price concession.
What concessions mean if you're the seller
Concessions come out of your net proceeds just like a price cut does, so treat them as part of the same conversation as everything else it costs to sell. The strategic difference is what you get for the money. Offering a rate buydown or closing-cost credit can widen your buyer pool—especially first-time and move-up buyers who are payment-sensitive—without publicly lowering your list price and signaling weakness to the market. In a market where buyers are getting credits and buydowns on a majority of deals, a well-structured concession can be the thing that gets your home closed at a stronger effective price than a raw price cut would. When you're mapping out what it costs to sell a home in Salt Lake City, build a realistic concession line into the plan from the start.
Frequently Asked Questions
How much are seller concessions in Salt Lake City right now?
In the current market, concessions commonly run 1% to 3% of the purchase price, though the exact amount is negotiated deal by deal and depends on how long the home has been listed and how motivated the seller is. With a large share of Utah homes selling below original list price, closing-cost credits and rate buydowns have become routine parts of negotiations.
Is a rate buydown or a price reduction better for a buyer?
It depends on your plans. A buydown delivers bigger near-term savings and helps most if you expect your income to rise or intend to refinance if rates fall. A price reduction lowers your loan balance and quietly saves more over a long ownership horizon if you never refinance. For most payment-sensitive buyers in today's market, a buydown or closing-cost credit stretches the seller's dollar further than an equivalent price cut.
Can seller concessions be used as cash back to the buyer?
No. Concessions can only offset the buyer's actual, allowable costs—closing costs, prepaids, a rate buydown, and similar items—and can't be pocketed as cash at closing. If a seller agrees to more than those costs absorb, the excess typically has to be restructured as a rate buydown or a price reduction.
Do concessions count against my down payment or loan approval?
Concessions don't reduce your required down payment, and they're capped by your loan type—roughly 3% to 9% for conventional depending on down payment, 6% for FHA and USDA, and 4% for VA concessions. Your lender confirms the exact ceiling for your loan, so line that up before you write the offer.
Are builder incentives the same as seller concessions?
Functionally similar, but structured differently. Builders in the southwest valley tend to protect their list price to hold community comps, so they favor rate buydowns, lender credits, and upgrades over price cuts. Programs like Utah's S.B. 240 can stack additional assistance on qualifying new-construction purchases at or below $450,000.
Bottom line
Seller concessions are one of the most useful tools in a normalizing market, but only if you match the lever to the problem: a credit for cash-tight buyers, a buydown for payment relief, a price cut for a home that isn't drawing showings. The right choice hinges on your loan, your reserves, and how long you plan to own—and the numbers are worth running before you sign anything.
If you're buying or selling in Salt Lake City or anywhere across the Wasatch Front, we're happy to consult on the market and help you assess your options. Reach out to schedule a private consultation with our team.
About David Lawson
David Lawson is the founder of the Lawson Real Estate Team, a real estate group serving Salt Lake City and the greater Wasatch Front, including Sugar House, Holladay, Cottonwood Heights, Draper, and the fast-growing southwest valley and northern Utah County. He leads a team that has closed more than 3,920 transactions and earned recognition as the #1 eXp Realty team in Utah (2022–2025) and previously the #1 Engel & Völkers team worldwide (2019, 2021). David and his team work with buyers and sellers across the full market—from first-time buyers and move-up family homes to multifamily investments and luxury real estate—guiding clients through one of the fastest-growing housing markets in the country.
