You’ve probably heard the housing market described as a “buyers” or “sellers” market. While a few years ago, the market was decidedly a sellers market, with a high demand for housing and lower interest rates, the market has shifted to a more balanced outlook. As the market shifts, more sellers are giving concessions to provide incentive to buyers. Here’s what that means for you as you enter a housing market.
Why Seller Concessions are Helpful
Seller concessions are helpful to both the seller and homebuyer as they sweeten the deal on homes and can persuade buyers on the fence to move forward with the home purchase. Negotiations can help combat rising mortgage rates, inflation, and economic uncertainty, which affects the buyer and seller alike.
Concessions often cover the cost of the following:
- Loan Origination Fees
- Recording Fees
- Appraisal Fees
- Property Taxes
- Title Insurance
These costs are typically adjusted before closing and can give you the confidence to move forward with more negotiating power.
Record Number of Seller Concessions Granted to Buyers: The Stats
Not sure if home sellers will agree to concessions?
Stats show that more sellers are agreeing to concessions than in previous years. According to Redfin, sellers granted, on average nationally, concessions to 41.9% of homebuyers in the 4th quarter of 2022. In contrast, concessions were given to 30.9% of homebuyers in the 4th quarter of 2021. Looking more specifically at Detroit, Michigan, the number of concessions given in 2021 vs. 2022 increased by 20.4 ppts.
Not only are concessions on the rise, but more home sellers are also cutting the sale price of their homes. Redfin buyers’ agents have confirmed that a record 22% of home sales in the 4th quarter of 2022 included both a concession and a sale price below the listing price.
What That Means for Home Buyers
Knowing more sellers are willing to agree to concessions means buyers will begin to notice the power shift in a market that was previously a sellers market. Home buyers can negotiate concessions more confidently to help close a deal that makes sense for them. While most seller’s concessions include the items listed above, buyers can negotiate for credits for home repairs or even on the home’s listing price. Seller concessions are a win/win for the buyer and seller alike and can help each party move forward with their goals.
About Michigan Mortgage Lender, Julie Krumholz
Julie Krumholz is no stranger to the changes in the real estate market and what they mean for homebuyers. Her over 35 years of experience in the mortgage industry has made Julie a trusted resource and friend to homebuyers. Julie has worked in processing, closing and loan origination, underwriting, QC auditing and has even co-owned a mortgage brokerage firm. Julie applies her knowledge to help first-time and seasoned homebuyers alike make their homeownership goals a reality.