com·pen·sa·tion /ˌkämpənˈsāSH(ə)n/ noun
as by rewarding someone for service or by making up for someone’s loss, damage, or injury by giving the injured party.

con·ces·sion /kənˈseSH(ə)n/ noun
a thing that is granted, especially in response to demands; a thing conceded.

Compensation is essentially another term for commissions. It represents the contractual obligation of either the seller or buyer to pay the listing agent and/or buyer’s agent. This obligation is outlined within the sales contract or buyer-agent agreement.

Concession, on the other hand, refers to the act of the seller giving up or offering a monetary sum to the buyer, typically for covering closing costs, which can sometimes include compensation for the buyer’s agent.

It’s crucial to note that once concession is involved, specific loan type rules come into play, see image below. Government loans, for instance, do not permit seller concessions to be used for paying the buyer’s agent’s compensation. Furthermore, VA loans strictly prohibit any form of buyer compensation to the buyer’s agent, regardless of the funding source.