Home sellers are basically throwing money at buyers right now
Home sellers are doing way more to entice homebuyers these days, according to data from Redfin published Thursday morning.
Why it matters: Oh, how the tables have turned. During the pandemic real estate frenzy, sellers held all the cards and desperate buyers did whatever they could to close a deal — waiving the inspection, paying way over asking, etc.
- Now, it's homebuyers who must be wooed.
Details: 42% of sellers offered at least one concession to buyers, often in the form of cash credit for things like repairs, closing costs, or mortgage rate buydowns.
- That's up from 31% a year ago, and back to the same level as July 2020, when the boom was just getting underway.
State of play: Concessions were smaller and much less frequent last year, Van Welborn, a Redfin agent in Phoenix, tells Axios.
- But when mortgage rates started shooting up last fall, sellers grew desperate to attract buyers and concessions mounted a comeback.
- Since sellers built up so much equity over the past few years, they've been willing to shell out more cash than before the pandemic, he says.
- In the last month, one of Welborn's clients got $25,000 from a seller on a $650,000 house to pay for a roof (plus they threw in all of the home's midcentury modern furniture for $10). Another collected $10,000 to help with closing costs.
Plus: Homebuilders are offering concessions to real estate agents who bring in buyers, too. One builder in Houston is giving agents a $10,000 bonus on top of their typical 3% commission and a chance to win a Mercedes, per a flyer, shared with Axios.
Zoom out: The rising popularity of concessions could help explain why home prices haven't fallen faster, said Angela Cherry, communications director at Redfin.
- With a concession, buyers pay less money, but list prices and closing prices don't change. "They're kind of masking the true cost of the transaction," she said.
- Homebuilders especially like them because they're reluctant to lower list prices and anger folks who recently bought new homes in the same community, said Dan Hanson, executive director of market retail at LoanDepot, a lender that specializes in new construction.
- Home prices fell steadily in the fall, per Case-Shiller's December report.