Home sellers are handing out goodies at near-record levels in their efforts to land buyers. Some 44% of sellers gave away something to their buyers in the first quarter, up from 39% at this time last year, and just shy of a record 45% set at the start of 2023.
These concessions include anything sellers provide to reduce the buyer’s cost, including money toward repairs and/or closing costs and mortgage rate buy-downs. They do not include situations in which sellers lowered their asking price for a home and the buyer negotiated a lower price.
That’s all according to a new report from real estate brokerage Redfin, which also found that some sellers are doing both — giving out concessions and getting less money than they hoped for when they listed their homes. Nearly 22% of houses sold in the most recent quarter went for less than the asking price and included some other concession, which is up from almost 19% a year earlier.
Broken down further, 16% had a price cut and a concession, up from 13% a year earlier. And almost 10% had all three — a concession, a price cut, and a final sale price below the original list price. That is up from 8% a year ago.
In the new home market, incentives are even more common. In February, according to Zonda, a new construction-centric marketing and analysis firm, 56% of home builders offered some kind of giveaway on to-be-built houses, and 74% on move-in ready units. Mortgage-rate buydowns are the most common concession. Zonda tracks 15,700 new communities nationwide.
Existing home sellers are joining the trend largely because the market has tilted in the favor of buyers. Not only is demand sluggish because of high prices and high loan costs — not to mention economic uncertainty — sellers also are facing more competition out there with home listings currently at a five-year high.
Even so, Redfin agents say many sellers are still overpricing their residences, which tends to make them linger longer on the market.
“It’s super common to see seller concessions for condos and new-construction townhouses, but less so for single-family homes — unless the single-family home has been sitting on the market for a while,” stated Stephanie Kastner, a Redfin agent in Seattle, Wash., where more sellers gave concessions than any of the other 24 markets analyzed.
Seattle sellers gave concessions to buyers in 71% of home-sale transactions during the first quarter. That’s roughly double the 36% share from a year earlier, which also was the largest increase in incentives among the metros in the study.
Chaley McVay, an agent in Portland, Ore., which registered the second largest increase in giveaways, says a majority of offers she is writing for buyers request concessions, particularly if the buyer is purchasing a home for the first time, but the “ask” has changed somewhat.
“Buyers used to ask for concessions to cover little things like repairs. Now they’re negotiating concessions so they can afford to buy a home,” McVay says. “A lot of sellers are offering money for mortgage-rate buydowns, and I recently had one seller cover seven months of HOA fees for the buyer.”
Concessions aren’t nearly as prevalent everywhere, though. In New York, less than 6% of buyers scored a giveaway from the respective sellers. That’s down from almost 16% from a year ago and represents the lowest share among the 24 metro areas studied.
Incentives also are sagging in Miami, Fla.; San Antonio, Texas; Tampa, Fla.; and Phoenix, Ariz. But there’s a reason for that: those markets have been cooling for some time, Redfin noted, so sellers there have already been pricing their places more realistically, and thus they don’t need concessions to move their properties.
