Home sellers gave concessions to buyers in 44.4 percent of home-sale transactions in the first quarter, according to a new report from Redfin. That’s up from 39.3 percent a year earlier and is just shy of the 45.1 percent record high at the start of 2023.
This is based on an analysis of data submitted by Redfin buyers’ agents across the country, covering rolling three-month periods from 2019 to present. A concession is recorded when an agent reports a seller provided something that helped reduce the buyer’s total cost of purchasing the home. That could include money toward repairs, closing costs and/or mortgage-rate buydowns. It does not include situations in which the seller lowered the list price of their home or lowered the price due to a negotiation with a buyer.
Sellers are increasingly handing out concessions because the housing market has tilted in favor of buyers, according to Redfin. Homebuyer demand is sluggish due to high home prices, elevated mortgage rates and economic uncertainty. Sellers are also facing more competition from each other, with listings now at a five-year high. When buyers have more options to choose from, it typically means they have more negotiating power. Plus, Redfin agents report that many homes are overpriced, which often means they linger on the market, forcing sellers to offer concessions to find a buyer.
Chaley McVay, a Redfin Premier real estate agent in Portland, Ore., said a majority of offers she is writing for buyers request concessions from the seller — especially if the buyer is purchasing a home for the first time.
“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 said. “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.”
McVay continued: “Sellers are feeling nervous because a lot of them bought at the top of the market in 2021 and 2022 and will now be re-buying at a higher mortgage rate. They’re worried about net proceeds. That’s why I recommend my buyers ask for concessions instead of a lower sale price — it can be a win-win because then the buyer is catching a break and the seller doesn’t have to go below the price they had in their head.”
Seattle home sellers gave concessions to buyers in 71.3 percent of home-sale transactions during the first quarter — the highest share among the 24 major metropolitan areas Redfin analyzed. That’s roughly double the 36.4 percent share of a year earlier, representing the largest increase among the metros Redfin analyzed.
“It’s super common to see seller concessions for condos and new-construction townhomes, but less so for single-family homes—unless the single-family home has been sitting on the market for a while,” Seattle-area Redfin Premier real estate agent Stephanie Kastner said in a release. “Condos have become a tougher sell because of skyrocketing HOA fees and insurance. And builders are offering concessions because it’s in their best interest to keep sale prices high; they’re willing to pay buyers’ closing costs and maybe provide a free washer-dryer if it means they don’t have to drop the listing price.”
Portland saw the next biggest increase, up 14.2 percentage points to 63.9 percent, which was the second highest rate. Next came Los Angeles (+11 ppts to 56.1 percent), San Jose, Calif. (+10.6 ppts to 16.7 percent) and Houston (+6.2 ppts to 46 percent).
New York saw the biggest drop in concessions. Home sellers there gave concessions to buyers in 5.5 percent of home-sale transactions, down 15.7 percentage points from a year earlier and the lowest share among the metros Redfin analyzed. The next biggest declines were in Miami (-13.1 ppts to 33.8 percent), San Antonio (-10.9 ppts to 44.4 percent), Tampa, Fla. (-9.2 ppts to 33.9 percent) and Phoenix (-3.5 ppts to 51.2 percent).
After New York, the lowest concession rates are in San Francisco, San Jose, Boston and Chicago.