Redfin reports that more than a third of home sellers are offering concessions to buyers
Sellers are handing out freebies to attract buyers, who are becoming increasingly likely to back out of deals as mortgage rates rise
Seattle, November 14, 2023(BUSINESS WIRE)–(NASDAQ: RDFN)–Home sellers offered concessions to buyers in 35% of U.S. home sales during the three months ended October 31, according to a new report from Redfin (redfin.com), the leading… Home management. Technology-enabled real estate brokerage. This hasn’t changed much from 35.9% one year ago but is up from 27.6% two years ago.
That’s according to data provided by Redfin buyers’ agents across the country, starting in 2020. A lien is scored when an agent reports that the seller provided something that helped reduce buyers’ overall cost of purchasing the home. This could include money for repairs, closing costs, and/or purchases at mortgage interest rates. It does not include cases where the seller reduced the list price of their home or lowered the price due to negotiation with the buyer.
Mortgage rates hit a 23-year high in October, slowing demand for homebuyers and prompting some sellers to offer freebies to attract bidders. This represents a retreat from the pandemic home-buying frenzy, when fierce competition among buyers made concessions more scarce.
“Sellers are becoming more open to the idea of offering perks like cash for repairs and lower mortgage interest rates, in part because many of them want to sell their homes quickly due to major life events like divorce and new jobs,” said Seattle Redfin Premier real estate agent David Palmer. “We don’t have to move, they’re staying put and holding on to low mortgage rates.” “The good news for buyers, besides more concessions, is that contingent offers are also more feasible in a market like this, meaning home seekers don’t have to compromise about inspections and other important safeguards.”
Palmer continued: “Home hunters are more difficult than ever before. Buying a home today is very expensive, so they want to make sure they find the right home. Buyers are becoming increasingly likely to close the deal if they don’t get the perks they want. “
Nearly 53,000 home purchase agreements were canceled in the United States in September, equivalent to 16.3% of the homes that went under contract that month – the highest percentage since October 2022, when mortgage rates exceeded 7. % for the first time in two decades.
Another reason the share of sellers offering concessions has risen from pandemic lows is that homebuilders, who offer deals so they can unload inventory, are capturing a growing portion of the market. Nationally, 30.6% of single-family homes for sale in the United States in the third quarter were new construction. This is the highest share of any third quarter on record, largely due to a decline in the number of individual homeowners putting their homes up for sale.
Concessions would likely be more common today were it not for historically low housing stock, which fuels competition in some areas. Inventory is tight because many homeowners are reluctant to put their homes on the market because buying and selling another home means giving up a very low mortgage rate.
Some sellers lower their prices as well as offer perks
Some sellers offer concessions And Getting less money than they had hoped for their home, which can happen when the seller lowers the asking price, accepts an offer that is lower than the asking price, or both.
One in seven (14.4%) homes sold during the three months ended October 31 had their final sales price below the asking price plus lien. Just over one in 10 (11.5%) of homes sold during this period received a price reduction and concession. And 6.4% of them got all three – concession, lower price, and final selling price below the original list price.
Franchises are most common in Salt Lake City, and least common in Boston
Sellers in Salt Lake City gave concessions to buyers on 63.3% of home sales in the three months ended Oct. 31, the highest share among major cities analyzed by Redfin. Rounding out the top five are San Diego (60.9%), Denver (56.6%), Las Vegas (54.3%) and Raleigh, North Carolina (51.4%).
Many of the above metros saw a spike in homebuyer demand during the pandemic as remote workers sought relatively affordable parts of the country. This has caused home prices to skyrocket, pricing out a lot of people. The demand for cooling has prompted more sellers to pull out stops to attract buyers.
Sellers in Boston made concessions in just 11.1% of home sales, the lowest share of the metro in Redfin’s analysis. This is followed by San Jose, California (14.4%), New York (14.5%), Philadelphia (15.7%), and Chicago (19%).
Concessions rose the most in Salt Lake City, and fell the most in Chicago
Salt Lake City saw a larger year-over-year jump in vendor concessions than any other metro Redfin analyzed. Sellers there made concessions to buyers in 63.3% of home sales during the three months ended Oct. 31, up 25.2 percentage points from a year earlier. The next largest increases were in Tampa, FL (+23.5 points to 43.1%), Charlotte, NC (+11.6 points to 50.8%), Minneapolis (+11.4 points to 35.3%), and Dallas (+10.6 points to 49.3%). .
The share of sellers offering concessions fell the most in Chicago (-21.6 percentage points to 19%), followed by Phoenix (-7.8 points to 51%), Philadelphia (-6.8 points to 15.7%), and San Diego (-6.1 points to 60.9). . %) and Washington, D.C. (-5.8 percentage points to 32.2%).
To view the full report, including charts and region-level data, please visit: https://www.redfin.com/news/seller-concessions-october-2023
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live through brokerage, rentals, lending, title insurance, and renovations. We also operate the #1 real estate brokerage website in the country. Our homebuying clients see homes first with same-day tours, and our lending and title services help them close quickly. Clients selling a home in certain markets can have our renovation crew fix up their home to sell for top dollar. Our rental business enables millions across the country to find apartments and homes for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to a minimum, less than half of what brokerages typically charge. Since our launch in 2006, we’ve saved clients over $1.5 billion in commissions. We serve more than 100 markets across the United States and Canada and employ more than 4,000 people.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.
View source version on Businesswire.com: https://www.businesswire.com/news/home/20231114168270/en/
Contacts
Redfin Journalist Services:
Angela Cherry, 913-638-8249
Click @redfin.com
