I’ve been investing in real estate and practicing Brazilian Jiu Jitsu for about the same amount of time - nearly two decades. With both - I haven’t been as consistent as I would like - but I remain committed and my games' tend to grow in concentrated periods of intense effort and dedication. Each has sharpened (and humbled!) my ability to regulate emotions, apply strategic pressure, and protect my physical, mental, spiritual, and financial well-being. I am not black-belt level in either yet - but mastery is inevitable when one keeps showing up.

Today’s flow touches on Seller Concessions: A technique that investors (of any degree) can utilize to incentivize investments into submission!

In real estate, seller concessions are often sold as a sweetener— extra cash from the seller to cover closing costs or repairs. But for leveraged investors, they’re not just a perk; they’re a weapon. Used correctly, they can improve cash flow, reduce capital outlay, and boost returns. Used poorly, they can quietly eat into your deal for decades.

What a Seller Concession Really Is - A seller concession is not “free money.” In most cases, it’s simply a price adjustment in disguise—one that your lender allows you to apply toward certain costs like closing fees, prepaid expenses, or interest rate buydowns. With most conventional mortgages the maximum seller concession is 2%, second homes can be 3%+ and primaries can be 6%+ (although cannot contribute to the actual down payment percentage).

If you’re financing the property, part of that concession is effectively rolled into your mortgage. Translation: you could be paying interest on it for the next 15–30 years. However - depending on how long investors are in a particular loan will factor into the recapture or recuperation

The Good: Strategic Uses That Boost ROI - Think of seller concession BJJ as redirecting the seller's give into your financial gain.

Examples include:

Rate Buydowns – Use the credit to permanently lower your interest rate or lock in a multi-year buydown, improving cash flow immediately.
Revenue-Critical Repairs – Fund upgrades that directly impact booking rates and occupancy for STRs (hot tub, furniture, curb appeal).
Preserve Cash Reserves – Cover closing costs with the concession so your capital stays in your pocket for emergencies or expansion.

The Bad: Illusion of a Better Deal - A $20,000 concession feels good—until you realize the seller simply padded the purchase price to make it happen. If that inflated value pushes you above market comps, you’re now overleveraged and your “deal” is already underwater.

For example on our most recent primary purchase even with our 2.5% concession the home still appraised for $25K more than our purchase price :) In the event the home does not appraise - parties would need to renegotiate terms or revise the concession.

The Master Move: Anchor the Price, Then Negotiate Concessions

In martial arts, you use your opponent’s momentum against them. In real estate, you lock in a fair purchase price first, then negotiate a concession that actually serves your investment goals - or that is justified through inspections or required repairs or anticipated cots. This keeps your loan amount realistic (and capital requirements low) while extracting maximum value from the concession.

Seller concessions can make or break your ROI—especially for leveraged investors. They're a tool, not a trophy. Use them to strengthen your position, increase cash flow, or preserve liquidity. Increasingly sellers are more open supporting creative or collaborative solutions towards mutual acceptance and compromise towards closings.