In the ever-shifting landscape of real estate, seller concessions have emerged as a notable trend, offering buyers an unexpected advantage even in the face of climbing interest rates. “Seller concessions” are those little extras that seller’s will include in a contract to sweeten the deal for eager buyers. However, they can also be a way for buyer’s to bargain with sellers without giving a low-ball offer which can sometimes turn sour. So, why are seller concessions becoming so popular, especially when interest rates are playing hardball?

Let’s look at the data –

According to the latest scoop from Redfin, about 35% of home sales in the U.S. during the last three months had sellers giving concessions. Now, these aren’t just your run-of-the-mill discounts. We’re talking about sellers footing the bill for repairs, helping out with closing costs, or even pulling off some magic to lower mortgage rates by kicking in for a rate buydown (don’t worry, I’ll do a whole post on rate buydowns and how they dinner from ARMs 😉 ). These concessions can significantly impact the total cost of purchasing a property… making some dream houses finally within reach. It’s like getting a cherry on top of your sundae, but for your new home!

But why is this happening? Sounds too good to be true…

But why the sudden generosity? Well, turns out the plateaus of high mortgage rates are giving sellers a bit of a headache. With buyers hesitating and demand cooling off, sellers are rolling up their sleeves and saying, “Hey, what about this *sparkle sparkle jazz-hands*!” It’s a win-win: sellers move their property faster, and buyers snag a sweet deal in the process.

Take it from Seattle’s very own real estate guru, David Palmer. He’s seen it all: sellers eager to close deals pronto, and buyers flexing their negotiation muscles like never before. And guess what? In this market, buyers DO have power. They’re picky, and they’re not afraid to walk away if they don’t get what they want. Can you blame them?

In fact, just last September, over 53,000 home-purchase agreements went poof into thin air. That’s a lot of frustrated buyers saying, “Thanks, but no thanks,” and moving on to greener pastures.

But wait, there’s more! It’s not just individual sellers jumping on the concession bandwagon. Homebuilders are throwing their hats into the ring too, offering perks left and right to clear out their inventory. And you know what that means? Traditional sellers have to up their game, offering their own goodies to stay in the race.

Now, here’s where it gets interesting. Some sellers aren’t just stopping at concessions; they’re slashing their prices too. Yep, you heard that right. It’s like a double whammy for buyers: a lower price tag and a side of concessions to sweeten the deal. Talk about a home-buying buffet!

But hey, not all cities are dishing out concessions like candy on Halloween. Salt Lake City, San Diego, and Denver? They’re leading the pack in terms of concession frequency. Meanwhile, Boston and San Jose are playing it cool with lower rates. It’s like each city has its own secret sauce for selling homes!

So, now what?

What’s the takeaway from all this? Well, while steady interest rates might sound like bad news, they’re actually stirring up some pretty tasty deals for savvy buyers. With seller concessions on the menu, it’s a prime time to snag that dream home without breaking the bank.

So, fellow mortgage mavens, let’s keep our eyes peeled and our negotiation skills sharp. With seller concessions spicing up the market, there’s never been a better time to score the home of your dreams. Happy house hunting!

Data Reference: Katz, L. (2023, November 14). More than one-third of home sellers are giving concessions to buyers. Redfin Real Estate News.