Home buyers are benefiting from free concessions when purchasing a home, a new study says.
Home sellers are offering 35% more concessions to house hunters in an effort to sweeten the deal and encourage would-be buyers to lock in the transaction, according to a new report from Redfin.
While one-third of sellers are now offering concessions, the report notes that this measure was little changed from a year earlier, but is up 27.6% from the same period in 2021.
According to Redfin, a concession is defined as something a seller provides to a buyer that helps reduce the total cost of purchasing a home, such as money toward repairs, closing costs, and mortgage-rate buydowns. This does not include situations where the seller lowers the list price due to negotiations with a buyer.
“Sellers have become more open to the idea of giving out concessions like cash for repairs and mortgage-rate buydowns, in part because many of them want to get their homes sold quickly due to major life events like divorces and new jobs,” said Seattle Redfin Premier real estate agent David Palmer in the report.
Other major reasons for the uptick in concessions are due to buyers increasingly backing out of transactions due to rising mortgage rates and sellers wanting to offload inventory.
In total, roughly 53,000 U.S. home-purchase agreements were canceled in September, or about 16.3% of homes that went under contract that month, marking “the highest percentage since October 2022,” per the report.
“House hunters are pickier than ever before. It’s really expensive to buy a home today, so they want to make sure they find the right one,” Palmer said in the report. “Buyers have become increasingly likely to terminate a deal if they don’t get the concessions they want.”
However, he adds that homeowners who do not have to move are “staying put” and “holding onto their low mortgage rates.”
“The good news for buyers, aside from more concessions, is that contingent offers are also more feasible in a market like this, meaning house hunters don’t have to waive inspections and other important safeguards,” he continued.
Overall, the top 5 markets in which sellers are offering concessions include Salt Lake City (63.3%), San Diego (60.9%), Denver (56.6%), Las Vegas (54.3%), and Raleigh (51.4%).
Dallas ranked fifth in terms of cities with the biggest year-over-year increases in concessions, increasing some 10.6 percentage points to 49.3%, and 11th overall among the list of 27 U.S. metro areas that were ranked.
