Buyer concessions make a comeback in the fourth quarter MABAB MassachusettsRealEstate FirstTimeHomeBuyers MassBuyerAgents

 Coming off years of bidding wars where potential buyers would waive all sorts of contingencies, today’s buyers are actually getting concessions from sellers. In fact, they’re getting them in record numbers. A new Redfin report found a record share of sellers are giving buyers concessions including money for repairs and mortgage-rate buydowns. In the fourth quarter of 2022, forty one point nine percent of home sales offered buyer concessions, the highest share in any three months, according to the report.

 That forty one point nine percent was up from thirty percent in the third quarter of 2022 and the fourth quarter of 2021 and outpaced the previous high of forty point eight percent in the three months that ended July 2020. The return of concessions comes as homebuyer demand has dampened due to rising mortgage rates, inflation and economic uncertainty, giving buyers in today’s market increased negotiating power. The pandemic had buyers waiving contingencies to win bidding wars when mortgage rates were at a record low from late 2020 through 2021.

 Van Welborn, a Redfin real estate agent in Phoenix said today’s buyers are asking sellers for things that were unheard of during the past few years “They’re feeling empowered, 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,” Welborn said. Not only were buyers getting contingencies in the last quarter of 2022, but the homes they were buying were coming at a discount. According to the report, a record twenty two percent of homes sold during that time had both a concession and a sale price below the listing price.

 The report also found a record nineteen percent had both a concession and listing price cut and a record eleven percent had all three. The market with the biggest concessions was Phoenix where buyers in sixty two point nine percent of home sales received concessions. That’s up thirty three point two percent from last year and is, according to the report, the largest increase of the twenty five metros where data was available. Seattle came in second with a twenty five point six percent increase, followed by Las Vegas at twenty two point two percent, San Diego at twenty point seven percent and Detroit at twenty point four percent. “It took a while, but seller expectations are coming back down to earth. Concessions were common before the pandemic, and we may be returning to that norm,” Welborn said. “Sellers realize they’re not going to get $80,000 over the asking price like their neighbor did last year.”

 Concessions were less common in Austin, Texas, Philadelphia, New York and Chicago. They were most common in San Diego which gave buyers concessions in seventy three percent of fourth-quarter home sales, the highest share among the metros Redfin analyzed, followed by Phoenix at sixty two point nine percent, Portland, Oregon, at sixty one point six percent, Las Vegas at sixty one point three percent and Denver at fifty eight point four percent. New York had the lowest share of concessions giving concessions to buyers in only thirteen point four percent of sales, followed by San Jose, California, at fourteen point four percent, Boston , Ma at seventeen point five percent, Philadelphia at twenty two percent and Austin, Texas, at thirty three percent.

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