A benefit given by a buyer, seller, landlord or tenant in order to help facilitate a real estate transaction. Concessions can be given in both residential and commercial real estate, and are often predetermined during the negotiation period. Concessions are often included in closing costs, but come in various forms: covering moving expenses and repair costs, rent reduction, or even cash back to the buyer.
Note that concessions may affect the sales price of a property. When this is the case, appraisers may consider concessions when evaluating comparable properties and determining the value of a property. Likewise, concessions may impact the economics of a lease, in which case, effective rent may be more telling than stated rent.
