Buying or selling a home in Austin, Texas? Whether you’re a first-time buyer or a seasoned investor, navigating the world of seller concessions and closing costs can feel overwhelming. But don’t worry—we’re breaking it all down in this ultimate guide so you can approach your next real estate transaction with confidence.

What Are Closing Costs?

Closing costs are the fees and expenses—outside of the home’s purchase price—that buyers and sellers must pay to finalize a real estate transaction. These costs typically range between 2% to 6% of the home’s sale price and can vary depending on the type of loan, lender, and local fees.

In Austin, where home prices remain above the national average, closing costs can add up quickly. That’s why understanding who pays what—and how seller concessions can help—is crucial.

Common Closing Costs in Austin, TX

Here’s a breakdown of the most common closing costs for both buyers and sellers in the Austin real estate market:

For Buyers:

• Loan Origination Fees: Charged by the lender for processing the loan.

• Appraisal Fees: Usually around $500-$750 in Austin.

• Home Inspection Fees: Typically $300-$500.

• Title Insurance (Lender’s Policy): Protects the lender; often paid by the buyer.

• Prepaid Taxes and Insurance: Escrow for property taxes and homeowner’s insurance.

• Recording Fees: Charged by Travis County or surrounding counties.

For Sellers:

• Title Insurance (Owner’s Policy): Protects the buyer; in Austin, it’s common for sellers to pay this.

• Agent Commissions: Typically 6% of the sale price, split between buyer’s and seller’s agents.

• HOA Transfer Fees: If applicable.

• Prorated Taxes and Utilities: Sellers pay their portion up to the closing date.

What Are Seller Concessions?

Seller concessions are costs that the seller agrees to pay on behalf of the buyer to help reduce the buyer’s out-of-pocket expenses at closing.

These concessions are not part of the home’s purchase price but are negotiated during the offer process and written into the sales contract. They are used to help offset the buyer’s closing costs, making it easier for the buyer to afford the total cost of the transaction.

What Can Seller Concessions Cover?

Seller concessions can be applied to a wide range of buyer expenses, including:

Lender Fees

• Loan origination fees

• Discount points (to buy down the interest rate)

Title and Escrow Fees

• Title insurance

• Settlement agent fees

Prepaid Items

• Property taxes (prorated)

• Homeowner’s insurance (first year)

• Interest (prepaid mortgage interest)

Third-Party Costs

• Appraisal fees

• Attorney or legal fees (if required)

• Recording fees

Other Costs

• HOA transfer or setup fees

• Home warranties

• Repairs (sometimes credited at closing)

Why Would a Seller Offer Concessions?

Offering concessions is a strategic move for sellers, especially in a buyer’s market or when a home has been sitting longer than expected. It can help the seller attract more offers or close a deal faster—without needing to lower the price.

Common Situations Where Sellers Offer Concessions:

1. Buyers are stretching their budget: Especially first-time buyers who can afford the monthly payment but not the upfront costs.

2. Home needs updates or repairs: Instead of fixing things, the seller can offer a credit.

3. Home has been on the market too long: To incentivize an offer.

4. Appraisal issues: If the home appraises low, concessions can be adjusted to keep the deal alive.

5. Financing requirements: Certain loans have limits on how much buyers can pay out-of-pocket.

How It Works in Practice (Austin, TX Example)

Let’s say you’re buying a $500,000 home in East Austin, and you’re approved for a loan with 5% down. Your estimated closing costs are $15,000. You make a full-price offer with a request for $10,000 in seller concessions.

If the seller accepts:

• You pay less at closing

• The seller nets $490,000 instead of $500,000

• The deal moves forward with less friction

In some cases, the buyer might even offer slightly above asking price to offset the concession. For example:

Offer $510,000 with $10,000 in seller-paid closing costs.
If it appraises, the seller still nets $500,000.

Seller Concessions vs. Price Reductions

Here’s why seller concessions can be smarter than a price drop:

In Austin, where many buyers are using loans and trying to conserve cash, concessions often have a greater impact than a price reduction of the same amount.

Are There Limits?

Yes. Each loan type sets a maximum percentage of the purchase price that can be covered by seller concessions (explained in the earlier section), and concessions can’t exceed actual closing costs.

In a competitive buyer’s market, concessions are more common as sellers try to sweeten the deal. In Austin, where demand can vary by neighborhood and price point, seller concessions can be a powerful negotiation tool.

How Much Can a Seller Contribute?

The maximum amount a seller can contribute toward a buyer’s closing costs and prepaid items depends on the type of loan the buyer is using and the size of their down payment. These are regulated by lenders and set to prevent over-inflated home prices or risky lending practices. The amount a seller can contribute depends on the type of loan the buyer is using:

Keep in mind that even if a buyer requests the max allowed, the seller must agree to the terms during negotiation. Concessions should also be factored into the overall offer strategy.

Key Rules to Keep in Mind

• Concessions cannot exceed actual closing costs. If closing costs total $8,000, and the contract includes $12,000 in concessions, the extra $4,000 can’t be applied unless the lender allows it to cover items like buying down the interest rate or paying for prepaid taxes/insurance.

• Seller concessions must be negotiated upfront and included in the purchase contract.

• Appraisal still matters. If you increase the offer price to cover concessions, the home must still appraise at or above the new agreed-upon price.

In a city like Austin—where home prices vary from $300K condos to $1M+ homes—understanding these limits is essential for creating strategic offers and avoiding surprises during underwriting.

For example, in first-time buyer-heavy neighborhoods like Pflugerville, Hutto, or Kyle, seller concessions can make or break a deal. In higher-end areas like Westlake, Bee Cave, or Circle C, buyers with larger down payments may be eligible for up to 9% in contributions—allowing for creative deal structuring without price reductions.

Why Seller Concessions Matter in Austin

Austin’s real estate market has seen rapid growth, but it’s also shifting. In some neighborhoods, sellers are still receiving multiple offers. In others, especially with homes sitting on the market longer, buyers have more leverage to request concessions.

When Seller Concessions Make Sense:

• A home has been on the market for 30+ days

• The buyer is stretching their budget to purchase

• The home needs updates or repairs

• The seller wants to close quickly

Offering concessions can help the seller stand out without having to lower the listing price dramatically. For buyers, concessions can mean keeping cash in hand for moving costs, repairs, or furnishings.

Real Example (Austin, TX Scenario)

Let’s say you’re purchasing a home in South Austin for $450,000 using an FHA loan.

Your lender estimates $12,000 in closing costs and prepaid items. You negotiate with the seller to contribute $10,000toward those costs.

• Buyer brings only $2,000 to closing (instead of $12,000)

• Seller nets $440,000 (instead of $450,000)

• Deal gets done faster with less financial stress

This is a win-win situation when structured properly.

How to Negotiate Seller Concessions

1. Know the Market: Ask your agent for a CMA (Comparative Market Analysis) and days on market.

2. Get Preapproved: Lenders can estimate your closing costs and help guide your offer.

3. Make a Strong Offer: If you’re asking for concessions, consider offering full price—or close to it.

4. Work With an Experienced Agent: A knowledgeable agent familiar with the Austin market can craft offers that benefit both sides.

Plan Ahead For Closing Costs and Seller Concessions When Buying A House In Austin, Texas

Whether you’re buying or selling, understanding how closing costs and seller concessions work can help you save thousands—or make your home more attractive to potential buyers.

In a dynamic market like Austin, staying flexible and informed is key. If you’re unsure about your specific situation, consult with your real estate agent and lender to create a strategy that works for your goals.

Need Help Navigating Closing Costs and Concessions in Austin?

I’m a local Austin real estate expert and would be happy to answer your questions, help you negotiate a better deal, or guide you through your next home sale or purchase.

Contact me today to schedule a free consultation.