The fourth quarter of 2022 saw home sellers give concessions to buyers in 41.9% of all U.S. home sales, the largest share of any three-month period on record, according to Redfin.
The previous high was 40.8% in the three months ending in July 2020, when the COVID-19 pandemic was wreaking havoc on all facets of the U.S. economy and the residential market all but ground to a halt. Conversely, in both third-quarter 2022 and fourth-quarter 2021, concessions were given in slightly more than 30% of all home sales.
Concessions were almost unheard of during the pandemic era’s homebuying boom, when buyers were waiving every contingency they could just to get sellers’ attention and edge out competition. But with rising mortgage rates combining with inflation and recessionary worries to steeply cool homebuying demand, concessions are on the comeback trail as sellers look to entice buyers back into transactions.
“Buyers are asking sellers for things that were unheard of during the past few years,” said Van Welborn, a Redfin agent in Phoenix. “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 he recently helped a buyer negotiate a $10,000 credit to cover a new roof and some other repairs.
“We originally asked for $15,000 but were happy with $10,000 because the homeowner also agreed to sell for less than their asking price,” he said.
Notably, 22% of home sales recorded by Redfin agents in the fourth quarter of last year included both a concession and a final sale price below the asking amount — a new high. Additionally, a record 19% of sales included both a concession and a cut in the listing price that occurred while the home was still on the market. Eleven percent — also a new high — included all three of these occurrences.
“It took a while, but seller expectations are coming back down to earth,” Welborn added. “Concessions were common before the pandemic and we may be returning to that norm. Sellers realize they’re not going to get $80,000 over the asking price like their neighbor did last year.”