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Takeaways
- A new Redfin study shows that 44% of U.S. homes-sale transactions during the first quarter included home sellers offering concessions to buyers, which is near the record set early in 2023.
- The real estate company said that as the housing markets starts to favor the buyers, they will have more options available to them and more bargaining power.
- Seattle had the highest rate during the first quarter of concessions, while New York metro recorded the lowest.
According to a recent report, more home sellers are offering concessions to buyers.
Redfin reports that 44% of U.S. homes-for-sale deals in the first three months of 2019 involved concessions. That’s up from just 40% a year earlier and is slightly below the all-time high of over 45% set at the beginning 2023. Experts believe that more concessions are an indication that the market is shifting in favor of buyers.
Concessions refer to agreements between a seller and buyer to adjust the price of the sale or other terms in response a new condition. For example, a home inspection may reveal the need for expensive repairs. Redfin says that while home prices, rising mortgage rates, and economic insecurity are weighing down the housing market, there is also more competition among sellers, as listings are at a five year high. More competition can give home buyers more bargaining power.
In a press statement, Chaley McVay of Redfin in Portland, Ore. said that buyers used to ask for small concessions, such as repairs. “Now, they’re negotiating concessions to afford to buy a house.” McVay listed examples, including money to buy down mortgage rates and an offer that would cover more than a half-year’s worth of HOA dues.
Experts say that sellers may prefer concessions as they can speed up a deal without requiring a lower price. McVay said that sellers are worried about their net proceeds because many of them purchased at the top of market in 2021 or 2022. They will then be buying at a mortgage rate higher.
“That’s why I recommend my buyers ask for concessions instead of a lower sale price—it can be a win-win because then the buyer is catching a break and the seller doesn’t have to go below the price they had in their head,” she said.
Redfin reports that concessions are most prevalent in Seattle where, during the first quarter, more than 70% of all home-sale deals offered concessions to buyers. Redfin says that in the New York metro region, concessions were the lowest in the first three months of the year. Only 5.5% home sellers offered concessions to the buyers.
