How the tables have turned: Concessions are offered in almost 50% of home sales
In 2021, homebuyers did everything they could to buy homes. They offered more than the asking price and skipped inspections to close the deal. The housing market has changed dramatically since then, and sellers have to be more flexible. Redfin’s latest report shows that 45.5% of home sellers made concessions to buyers during the three months ending February 28.
This is a 31% increase over the same period 2022. It also represents the highest percentage of concessions in any three-month period according to the brokerage’s records which date back to June 2020.
Redfin defined a concession as any offer made by the seller to reduce the buyer’s total costs of purchasing the home, other than a lower sale price. Concessions in this instance include money towards closing, mortgage-rate buydowns and the cost of repairs.
“Any home with an eight-year-old roof is just sitting. Buyers don’t want any additional funds for repairs,” said Elena Fleck of Redfin, a Palm Beach-based real estate agent. “I had a few sellers offer credit for new roofs to close this deal.”
Redfin also found that many sellers are accepting lower offers or slashing their asking price. Nearly 25% of home sales (25.2%) included a concession or a final sale price lower than the list price in the three months ending February 28.
“Buyers are more selective and demanding today than ever before. Fleck stated that buyers today are willing to wait until they find the perfect house. This was not the case during the pandemic boom in homebuying.
Many buyers have had to stop their home-buying plans due to high mortgage rates and high home prices. This trend is becoming more common in order to help buyers seal the deal. The higher demand for homes and the low mortgage rate tempered buyers’ expectations of concessions.
According to the report, pandemic boomtowns in coastal markets and coastal markets have seen the largest increases in seller concessions due to rising interest rates, high home prices, and which caused these markets to cool off “relatively rapidly.”
The three months ending February 28, 2018, saw the largest increase in seller concessions in Seattle. Seattle sellers offered concessions to buyers in over half (51.6%) all home sales, up from 20.1% a year ago. There have been significant increases in seller concessions in Phoenix, Denver, San Diego, San Diego, and Las Vegas.
New York, on the other hand, saw the lowest percentage of seller concessions over the same period with 16.7% of sellers granting concessions to buyers. Also, concession rates were low in San Jose, Boston and Philadelphia during that period.