The fourth quarter of 2022 saw the largest percentage of home sellers making concessions to buyers, accounting for 41.9% of all home transactions, according to Redfin data.
This surpasses the previous high of 40.8% during the three months ending in July 2020, per Deputy Chief Economist Taylor Marr, when the housing market greatly slowed near the start of the Covid-19 pandemic.
When a seller makes a contribution that lowers the buyers' overall cost of purchasing the home, it is considered a concession. This can include funds for closing expenses, mortgage rate buy-downs, or repairs.
Redfin’s data does not include situations in which sellers lowered the listing price of their home.
“Buyers are asking sellers for things that were unheard of during the past few years,” said Van Welborn, a Redfin real estate agent in Phoenix.
“They’re feeling empowered,” Welborn said. “Partly because their offer is often the only one, and partly because they know sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions.”
It's not simply concessions, the report says. As buyers are deterred by persistently high mortgage rates, homeowners are selling their homes for less than they’d like.
Redfin agents tracked home sales in the fourth quarter, and a record 22% of those sales involved both a concession and a final sale price that was less than the listing price.
A record 19% of those sales also involved a concession and a listing-price reduction that took place while the home was still on the market.
A record 11% included all three.
Where Are Home Sellers Offering Concessions At?
In the fourth quarter, 62.9% of sellers in Phoenix, Arizona made concessions to purchasers, up from 33.2% a year earlier.
Next came Seattle at 25.6%, Las Vegas at 22.2%, San Diego 20.7% and Detroit 20.4%.
If you’re a home seller thinking about offering concessions on your home or reducing your listing price, here’s how you can earn passive income by investing as little as $100 (or more, depending on your appetite) in a rental property to build long-term wealth.
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