Negotiations are making a comeback. Buyers have more room to ask for a better deal, and sellers are becoming more willing to say yes. Builders are also offering extra incentives to help make buying a home even more affordable.
That’s why, whether you’re buying or selling a home today, you’ll probably hear two terms come up a lot: concessions and incentives.
A concession is something a seller agrees to during negotiations to help move the deal forward.
An incentive is a special perk a builder or seller offers upfront to make a home more appealing to buyers.
Let’s take a look at what concessions and incentives are, how they work, and how they could make a difference when you buy or sell a home.
More Sellers Are Agreeing to Concessions
More sellers are becoming flexible to help get their homes sold. According to Redfin, nearly half of homeowners who recently sold their home offered the buyer a concession, the highest share ever recorded for this time of year. On top of that, about 1 in 7 sellers not only lowered their asking price but also offered a concession to help seal the deal, as shown in the chart below.
So what kinds of concessions are we talking about?
A seller may help cover some of your closing costs, pay for repairs, or offer a credit to lower your upfront expenses. These are all ways to keep a deal moving when buyers have more choices. And it’s not just homeowners who are making these kinds of offers.
Builders Are Cutting Prices, Too
New construction homes are seeing the same trend. According to the National Association of Home Builders, 62% of builders are offering incentives to attract buyers, and about 35% are also lowering their prices, as shown in the chart below.
Some of the most common builder incentives include:
Lower home prices
Mortgage rate buydowns to help reduce monthly payments
Free upgrades, such as premium finishes or new appliances
Danielle Hale, Chief Economist at Realtor.com, explains why this is happening:
““New construction has been one of the steadiest parts of the housing market over the past few years, but builders are clearly responding to today’s affordability pressures and higher levels of existing-home inventory.”
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Even builders, who are often seen as less willing to negotiate, are offering competitive prices and valuable incentives. In fact, they’ve been doing it for more than a year. The latest data shows this is the 15th straight month that more than 60% of builders have offered incentives to attract buyers, showing just how competitive the market has become.
What This Means for Your Move
If you're buying a home, now is a great time to negotiate. Whether you're looking at an existing home or new construction, there's a good chance the seller or builder may be willing to work with you on the price, the terms, or even both.
If you're selling, be prepared for buyers to negotiate. Even builders of brand-new homes are offering concessions more often than not. Being unwilling to negotiate on every detail could mean your home stays on the market longer or even causes you to lose a potential sale.
Bottom Line
Sellers and builders are giving buyers more room to negotiate this year. If you're wondering what kinds of concessions and incentives are realistic in our local market, let's connect and talk about your options.
