By Jeff Merrill | September 3, 2026

What Are Seller Concessions, and How Much Can You Ask For in Sioux Falls?

Seller concessions are money the seller agrees to credit toward your closing costs, prepaids, or a rate buydown so you bring less cash to the table. In Sioux Falls in 2026, how much you can ask for is capped by your loan type — 3% to 9% on conventional, 6% on FHA and USDA, and 4% on VA — but what you’ll actually get depends on how long the home has sat and how it’s priced. On a $340,000 home, a realistic ask runs $5,000 to $10,000, and it’s easiest to win on stale listings and standing builder inventory.

You found the house. You can cover the down payment. Then the loan estimate lands, and there’s another $10,000 in closing costs staring back at you.

That’s the moment most buyers ask the same question: can I get the seller to pay some of this?

You can. It’s called a seller concession, and in the current Sioux Falls market you have more room to ask than buyers did two years ago. But there are hard caps on how much a lender will let you take, and a soft ceiling on how much a seller will actually agree to. Get both right and you keep thousands in your pocket. Get them wrong and you either torch your offer or leave money on the table.

How Much Can You Ask a Seller to Pay?

Your loan type sets the ceiling. This isn’t negotiable — it’s a lender rule, and no seller can exceed it no matter how motivated they are.

Here’s where the caps land in 2026:

  • Conventional loans scale with your down payment: under 10% down, the seller can contribute up to 3% of the price; 10% to 24.99% down, up to 6%; 25% down or more, up to 9%. A rental property is capped at 2%.
  • FHA and USDA loans both cap concessions at 6% of the price.
  • VA loans cap concessions at 4% of the loan for items like prepaids and the funding fee, though a seller can separately cover your standard closing costs on top of that.

Run the math on a $340,000 home — right around the Sioux Falls median this summer — with 5% down on a conventional loan. Your 3% cap is $10,200. Buyer closing costs here typically run $10,000 to $12,000, so a full 3% ask can wipe out most or all of your closing costs in one move. For the full breakdown of what those costs include, see my guide to buyer closing costs in Sioux Falls.

One catch that trips people up: concessions can’t exceed your actual closing costs and prepaids. If your costs total $9,000, you can’t ask for $10,200 and pocket the extra $1,200. And on a conventional loan, concession money can’t go toward your down payment or your reserves — only toward costs.

Which Concession Actually Helps You Most?

Not all concessions are worth the same to you. The dollar amount is only half the picture — where you point it changes everything. You’ve got three real options.

A closing-cost credit is the simplest. Ask for $10,000, and that’s $10,000 less cash you hand over at the title company. If you’re stretched on cash-to-close, this is often the right call.

A price reduction lowers your loan instead. But dollar-for-dollar, it barely moves your payment — a $10,000 price cut saves you roughly $60 a month. It feels good on paper and does little for your monthly budget.

A rate buydown is where the same money does the most work. Put $10,000 toward a 2-1 buydown at today’s rates near 6.6%, and your payment can drop $400 to $500 a month in year one. That’s the tool builders in Tea, Harrisburg, and NW Sioux Falls lean on to move standing inventory — Allen Homes, Van Buskirk, and Cordes all advertise low payments this way instead of cutting sticker prices.

So which wins? If you’re short on cash, take the closing-cost credit. If you’re stretching to make the first year or two work and expect your income to climb, aim the money at a buydown. A straight price cut only pulls ahead when the home appraises low — because that’s the one problem concessions can’t fix.

That appraisal point matters. If the house appraises under your offer, your lender lends off the lower number, and no amount of concession closes that gap. Only a price cut or more of your own cash does — here’s what to do when a Sioux Falls home appraises low.

Selling? When Offering Concessions Beats Cutting Your Price

If you’re on the other side of this, concessions are a sharper tool than most sellers realize.

Say your $340,000 listing has sat for six weeks and showings have gone quiet. Your instinct is to drop the price $10,000. But a $10,000 price cut becomes a permanent public comp that drags down what the next appraisal supports in your neighborhood.

Offer that same $10,000 as a concession — advertised as “seller will buy down your rate” — and you create real urgency for the buyer who can use it, without resetting your comp. That buyer sees a payment several hundred dollars lower, not a $60 difference.

Here’s the honest limit, though. A concession only helps a buyer who writes an offer. If you’re getting no showings at all, price is your problem, and no credit fixes a price problem. Concessions close the gap on a home buyers already like; they don’t manufacture demand that isn’t there.

A few Sioux Falls specifics to keep straight either way. Concessions get written directly into the purchase agreement, and the title company — not an escrow company, the way it works in some states — reconciles everything on your Closing Disclosure. And no matter how the concessions shake out, the seller still pays South Dakota’s transfer fee (SDCL 43-4-21, $0.50 per $500 of price), which runs about $340 on a $340,000 home.

The market context matters too. Sioux Falls is sitting around 3.3 months of supply this summer — balanced, tilting slightly toward sellers. That means a blanket “pay all my costs” ask on a fresh, well-priced listing will get a fast no. Save the aggressive asks for listings that have aged past 30 to 60 days and for standing new-construction inventory, where sellers and builders are genuinely motivated to make a deal work.

Frequently Asked Questions

How much will a Sioux Falls seller actually agree to pay?
On a fresh, well-priced listing in this market, expect resistance — a modest $3,000 to $5,000 ask lands better than a big one. On stale listings or standing builder inventory, $8,000 to $10,000 is realistic, and builders will often go further with a rate buydown to move a completed home.

Can seller concessions cover my down payment?
No. On both conventional and FHA loans, concession money can only go toward closing costs, prepaids, and a rate buydown — never your down payment or your required reserves. You still need your own funds for the down payment.

Are seller concessions the same as a price reduction?
No. A price reduction lowers the sale price and your loan, which barely changes your monthly payment. A concession keeps the price the same but hands you cash toward costs or a lower rate, which usually helps your budget far more per dollar.

Do concessions fix a low appraisal?
No. If the home appraises below your offer, the lender lends off the lower value, and concessions can’t close that gap. Only a price reduction or more of your own cash solves an appraisal shortfall.

Who handles the concession at closing in South Dakota?
Your title company does. The agreed concession is written into the purchase contract and then reconciled on your Closing Disclosure, which you’ll receive at least three business days before closing so you can confirm the numbers.

Ready to Structure the Right Ask?

The difference between a concession that gets accepted and one that gets your offer tossed usually comes down to reading the specific listing — how long it’s sat, how it’s priced, and how motivated that seller really is. That’s a call worth making before you write the offer, not after.

If you’re buying or selling in Sioux Falls, Brandon, Harrisburg, Tea, or the surrounding area, let’s talk through what’s realistic for your situation. Call or text me at 605-201-2846, or start at siouxfallsgreathomes.wordpress.com.

About Jeff Merrill: Jeff Merrill leads The Jeff Merrill Team, powered by eXp Realty, serving Sioux Falls and the surrounding South Dakota communities of Brandon, Harrisburg, Tea, Madison, Mitchell, Canistota, and beyond. Jeff brings a direct, no-hype approach to helping buyers and sellers make confident decisions in every market.