The housing market has undergone a significant shift in recent months, with buyers regaining some of the leverage they lost during the pandemic-fueled seller’s market. This shift is reflected in the rising number of sellers offering buyer concessions in order to close deals. According to a recent report by Redfin, the share of home sellers giving concessions to buyers increased to 42.9% in the three months ending April 30, 2023. This is up from 25.5% a year earlier and is the highest rate since June 2020.
Top reasons for buyer concessions
- Rising mortgage rates: Higher interest rates have made homes more expensive for buyers, causing many to delay their homeownership plans. This has reduced demand, giving buyers more negotiating power.
- Economic uncertainty: The ongoing economic uncertainty is causing buyers to be more cautious, making them less likely to overbid on homes. As a result, sellers are more willing to negotiate in order to secure a sale.
- Increased inventory: The number of homes for sale has been increasing in recent months, giving buyers more options to choose from. This further strengthens their negotiating position.
Common types of buyer concessions
The most common seller concession is to contribute to the buyer’s closing costs. Closing costs typically range from 3% to 6% of the purchase price, so even a small contribution from the seller can save the buyer a significant amount of money.
Other common concessions include:
- Paying for repairs: Sellers may agree to pay for some or all of the repairs that are identified in a home inspection.
- Offering a mortgage rate buydown: A mortgage rate buydown is a temporary reduction in the interest rate on the buyer’s mortgage. This can make the monthly payments more affordable for the buyer.
- Providing a relocation allowance: Sellers may offer to pay for some of the buyer’s relocation expenses, such as moving costs or temporary housing.
Summary
Overall, the market has been shifting more in favor of buyers as of late. As for the rate of buyer concessions throughout the major Florida metro markets, we have seen the following:
- Miami: 35.4% in 2023, down from 40.0% in 2022
- Orlando: 34.3% in 2023, down from 35.7% in 2022
- Tampa: 43.1% in 2023, up from 19.7% in 2022
Are you thinking of buying a home in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! In addition, don’t forget to download our free Florida Home Search app and take the power of the South Florida MLS with you!
