Which statement accurately describes the difference between seller concessions and seller financing?

• A. Concessions are non-repayable gifts for closing costs; financing is a repayable second loan.
• B. Concessions are loans; financing are gifts
• C. Concessions are the same as financing
• D. Concessions reduce the loan amount; financing increases it

Answer: (A)

The key idea is the difference between a gift to cover costs and an actual loan. Seller concessions are funds the seller contributes toward the buyer’s closing costs, prepaid items, or points. These contributions do not have to be repaid as part of the mortgage—they’re effectively non-repayable gifts to reduce what the buyer brings to closing. Seller financing, by contrast, is when the seller provides a loan to the buyer to purchase the home. That money must be repaid to the seller, typically with interest, and this obligation is a loan secured by the property (often a second mortgage).

So describing concessions as non-repayable gifts and financing as a repayable loan captures the essential distinction: concessions reduce closing costs without creating a new debt to repay, while seller financing creates a loan the buyer must repay.