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When mortgage rates are high, most buyers immediately focus on the interest rate - and understandably so. Even a relatively small change in rates can have a noticeable impact on a monthly mortgage payment. But the interest rate isn't the only number buyers should be paying attention to.
In today's Greater Phoenix market, seller concessions can be one of the most valuable negotiating tools available to buyers. And when combined with the right financing strategy, they can potentially help buyers reduce upfront costs, lower their mortgage rate, preserve cash, or even achieve a lower monthly payment.
What Are Seller Concessions and What Can They Pay For?
Seller concessions are funds negotiated in the purchase contract that the seller agrees to contribute toward certain buyer expenses at closing.
Depending on the loan program and lender requirements, seller concessions may be used toward:
- Closing costs and lender fees
- Prepaid taxes and insurance
- Discount points to lower the mortgage rate
- Temporary or permanent rate buydowns
- Certain other allowable closing expenses
The maximum contribution depends on the loan program, down payment and other factors, so buyers should always confirm allowable concessions with their lender.
Seller Concessions Are Common in Greater Phoenix
Seller concessions have become a regular part of Greater Phoenix real estate transactions. Recent 2026 market data has shown roughly half or more of Phoenix-area sales closing with some type of seller concession, with one recent Greater Phoenix report showing approximately 54% of sales receiving concessions and a median contribution of $10,000.
However, those numbers vary significantly by price point, location and property. A buyer looking at a $350,000 home in one part of the Valley may have very different negotiating power than someone purchasing a $700,000 home in a highly competitive neighborhood.
Days on market, property condition, previous price reductions and competing offers also matter. That's why Valley-wide statistics are helpful, but the best negotiation strategy should be based on the specific home you're considering.
A $10,000 Concession vs. a $10,000 Price Reduction
When mortgage rates are high, negotiating the lowest possible purchase price isn't always the strategy that provides the greatest immediate benefit. For example, a $10,000 price reduction on a $450,000 home reduces the amount financed, but the monthly payment difference may be relatively modest when spread over a 30-year mortgage.
A $10,000 seller concession, however, could potentially be used toward closing costs or discount points to buy down the mortgage rate. For a buyer focused on monthly payment or cash needed at closing, that could be more valuable in the long run.
Should You Put More Money Down or Buy Down the Rate?
Buyers should also consider how they're using their own cash. Putting the largest possible amount down isn't automatically the best strategy.
For example, a buyer planning a 20% down payment could ask their lender to compare that option with putting less down and using some of the available cash - or negotiated seller concessions - to purchase discount points and lower the mortgage rate.
One discount point generally costs 1% of the loan amount, although the amount it lowers your rate varies based on current market conditions and lender pricing.
Ask your lender to compare scenarios such as:
20% down with no points
vs.
15% down with points
vs.
a smaller down payment with a seller-paid rate buydown
Compare the monthly payment, mortgage insurance, cash required at closing and how much money you'll have left in reserves. There isn't one strategy that's right for every buyer.
Temporary vs. Permanent Rate Buydowns
Seller concessions may also help fund a permanent rate buydown, where discount points lower the interest rate for the life of the loan.
Another option is a temporary buydown, such as a 2-1 buydown, which reduces the effective payment rate during the first years of the mortgage. Temporary buydowns can provide short-term payment relief, but buyers should still be comfortable making the payment at the full note rate. Refinancing later into a permanent lower rate is never guaranteed.
Don't Just Negotiate Price, Negotiate the Entire Deal
Today's buyers should look beyond the purchase price. Depending on the home and your financial priorities, negotiating seller-paid closing costs, a mortgage rate buydown, a lower purchase price, or a combination of these, could produce a better overall outcome.
Instead of simply asking, “How much can I get off the price?”, consider asking, “How can we structure this purchase to give me the best combination of monthly payment, cash-to-close and long-term cost?”
The Bottom Line
The best deal is often not the lowest price, but the way the purchase is structured. If higher mortgage rates have you sitting on the sidelines, it may be worth taking another look at the numbers. Depending on the property, price point and location, there may be opportunities to negotiate seller concessions or rate buydowns that make purchasing more affordable.
Thinking About Buying a Home in Arizona? I'd be happy to help you identify where buyers have negotiating leverage in today's Arizona market and develop a strategy that fits your goals. CONTACT ME or give me a call at 480-529-5893.