Ultimate Manual For First-Time Home Buyers

Seller Concessions Affect Appraisal Value

Appraiser determining how seller concessions affect appraisal value

As you embark on your quest to find the perfect home, it’s crucial to understand how seller concessions affect appraisal value. In this blog post, we will discuss the following key topics:

  1. Seller concessions.
  2. The Role of an Appraiser
  3. The Importance of Fair Market Value
  4. Scenarios in which seller concessions affect appraisal value
  5. What it means for a buyer when seller concessions affect appraisal value

What are Seller Concessions?

Before we discuss how seller concessions affect appraisal value, let us define seller concessions.

Seller concessions are incentives sellers offer to buyers. Sellers offer concessions to sweeten the deal. Sellers also offer concessions to help alleviate the financial burden for the buyer.

There are various concessions sellers can provide. The seller can:

  • Pay some of the buyer’s closing costs. Closing costs such as:
    • The loan origination fee
    • Appraisal fee
    • Attorney fee
    • Title insurance
  • Lower the asking price of the property.
  • Agree to make necessary repairs or improvements to the house.
  • Agree to include certain items in the sale. Certain items such as:
    • Appliances & Fixtures
    • Furniture & Home Furnishings
    • Window treatment & blinds
    • Outdoor equipment
  • Agree to pay for specific inspections. Inspections such as termite inspections or radon texting.

The Appraisal

Before we discuss how seller concessions affect appraisal value, let us define appraisal.

An appraisal is an assessment of the fair market value of a property. It is conducted by qualified appraisers. These appraisers analyze various factors to determine the fair market value of a property.

Appraisals are not only performed during a house purchase. They can be also performed:

  1. When homeowners want to refinance their mortgage.
  2. When homeowners apply for a Home Equity Loan or Line of Credit.
  3. When an insurance company wants to establish the insurable value of the property.
  4. During probate proceedings.
  5. For tax assessment purposes.
  6. In legal cases such as divorce settlements.

What is a Property’s Fair Market Value?

Fair market value is the estimated price at which a buyer and a seller would agree to make a transaction in an open and fair market. An open and fair market has the following characteristics:

  • Unbiased: Determined impartially, without any favoritism or bias towards either the buyer or seller.
  • Willing Buyer and Seller: Both the buyer and seller are knowledgeable, informed, and willing participants in the transaction.
  • No Pressure: There is no undue pressure or external influence on either party to complete the transaction.
  • Open Market: Competitive market where buyers and sellers can freely interact.
  • Reasonable Timeframe: The property or item is sold within a reasonable timeframe, without any urgency or time constraints affecting the negotiations.
  • Arms-Length Transaction: The buyer and seller have no personal or familial relationship, ensuring an objective evaluation.

A property’s fair market value is not necessarily the same as the asking price. In other words, the price set by the seller may not always reflect the actual value of the property in the market.

The asking price is the amount of money the seller wants to receive for the property. The fair market value is an estimate of what the property is truly worth based on objective factors like its condition, location, and recent sales of similar properties in the area.

How Seller Concessions Affect Appraisal Value

Do seller concessions affect appraisal value? Yes, they do. Here are 5 ways seller concessions affect appraisal value.

  1. Inflated Purchase Price.
  2. Improved Appraiser’s Perception.
  3. Higher Comparative Analysis.
  4. Improved Property Condition.
  5. Higher Demand From Buyers

Purchase Price Inflation

Seller concessions affect appraisal value when the seller factors the concessions into the price.


A seller believes her house is worth $300,000. The seller however intends to include the following concessions:

  1. $10,000 in closing costs
  2. $40,000 of personal property.

Total concession = $50,000

The seller sets the purchase price as $350,000 instead of $300,000.

Appraisers initial appraisal value = $355,000

The appraiser learns about the concession. She determines that the concessions have been factored into the price. She adjusts her appraisal value accordingly.

New & final appraisal value: $355,000 – $50,000 = $305,000.

Improved Appraiser’s Perception

Seller concessions affect appraisal value through the appraiser’s perception. If the appraiser is aware of significant concessions offered by the seller, they may take that into account during the appraisal process. The appraiser might perceive the property as more valuable or desirable due to the concessions. They can then factor that into their valuation. This will result in a higher appraised value.

Higher Comparative Analysis

Seller concessions affect appraisal value through comparative analysis. Appraisers analyze the sales price of comparable properties. If those properties included seller concessions, it may lead the appraiser to adjust the value of the subject property accordingly. For example, if comparable properties sold with significant seller concessions, the appraiser might adjust the appraised value of the subject property to align with the market trend.

Improved Property Condition

Seller concessions affect appraisal value when those concessions enhance the value of a property. These enhancements can be repairs, or improvements, or upgrades. Such enhancements (like an upgraded kitchen) add value to the house. This can in turn increase the appraised value of the house. Think about it this way, buyers would pay more for a house with an upgraded kitchen than for a similar house without.

Increased Demand From Buyers.

Seller concessions affect appraisal value by driving up the demand for a property. Price is determined by the law of supply and demand. The higher the demand, the higher the price. And vice versa. If a seller discloses the concessions before the property goes under contract, this can drive up the demand from buyers. In other words, more buyers view the house as a property worth buying. This drives up the appraisal value.

Please note that how seller concessions affect appraisal value is not absolute and varies depending on the specific circumstances of the transaction. It can vary based on the

  1. Nature and extent of the concessions,
  2. Local market conditions.
  3. The appraiser’s professional judgment.

Appraisal vs Purchase Price Discrepancy

What does it mean for a buyer when seller concessions affect appraisal value? If the adjusted appraisal value is lower than the purchase price, it can create challenges for the buyer, seller, and lender.

Depending on the loan-to-value ratio, the lender may require the buyer to increase their down payment or adjust the loan terms. In some cases, the lender may choose not to proceed with financing if the appraised value is significantly lower than the purchase price.

In such cases, the buyer will need to negotiate with the seller to lower the purchase price to align with the appraised value. Should the seller refuse to lower the purchase price, the buyer may need to pay the difference out of pocket.


Understanding how seller concessions affect appraisal value is crucial for first-time home buyers. By comprehending the factors considered by appraisers, the importance of fair market value, and the potential challenges associated with excessive concessions, buyers can approach negotiations with confidence and clarity.


Your Mortgage Minister.

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Jane Doe

Dedicated to providing the ultimate guide for first-time home buyers.