While homebuyers haven’t had much (or any) room to haggle amid the seller’s market that’s reigned for the past two years, a new report offers some indisputable proof that those days are officially over.
A recent survey by Realtor.com and HarrisX of 449 Americans who sold their home in the past 12 months reveals that sellers aren’t driving as hard a bargain today as they have in the past. In fact, they’re giving into buyers’ requests on a number of things that might have seemed unthinkable just months ago.
“Our survey shows that the overheated housing market of the past two years—which predominantly favored sellers—is beginning to regain a sense of normalcy, which is welcome news for homebuyers,” says George Ratiu, manager of economic research at Realtor.com. “The combination of higher mortgage rates and prices have noticeably cooled demand over the first half of the year.”
There was a time, not so long ago, when buyers were afraid to even ask sellers for any additional terms in their favor.
“The sad truth is that during crazy bidding wars, if buyers asked for concessions, they risked losing the home to others who were willing to forgo term changes or contingencies,” says New Hampshire real estate agent Josh Judge.
That’s just not happening anymore.
While we never expect to hit a perfect balance, let’s take a look at some of the survey’s numbers that indicate the scale is evening out a bit for buyers.
31% of buyers in July paid below asking price
Surprise! Research shows that almost one third of sellers in the last month actually dropped their prices below asking.
“As more homeowners have been listing their properties, rising inventory is motivating more of them to resort to price cuts in order to successfully close transactions,” says Ratiu.
As recently as March, the research shows that only 18% of sellers sold below asking price.
32% of sellers dropped the price because the home didn’t meet appraisal
“Meeting appraisal” means your bank or lending institution does an estimate of the value of the home you intend to buy, and if that appraisal shows the house is worth what you offered for it, it will “meet appraisal.”
But if the house doesn’t turn out to be what you offered for it in your bank’s estimation, you have what’s called an “appraisal gap.” At this point, you must consider a number of options, including coming up with all cash so you don’t have to deal with the bank at all, or increasing your down payment so the bank only loans on what it considers the property to be worth.
A third option is for the seller to cut the price so it’s more in line with the bank’s view. But that didn’t happen very often a year ago, since there was almost always a cash buyer waiting in the wings to pounce.
The fact that almost a third of sellers today are dropping their prices to accommodate the appraisal is a very good sign indeed for buyers.
92% of sellers accepted some buyer-friendly terms
“Buyer-friendly.” Don’t you love the sound of those words? Unfortunately, they’ve been used all too infrequently over the past two years.
So you’ll be pleasantly surprised to hear about some of the buyer-friendly terms sellers are now more willing to entertain. They include sellers agreeing to contingencies in the contract, such as the appraisal, home inspection, home sale, and financing. Sellers are also increasingly paying for some or all of the buyer’s closing costs; and are more flexible on the timeline for closing.
95% of sellers who sold in the past month reported that the buyer requested a home inspection
That’s up from 82% of those who sold 6 to 12 months ago. That shows that buyers are growing bolder, and they wouldn’t ask if they didn’t have some expectation of a seller accepting their requests.
A professional home inspection is always a good idea for homebuyers, but during the housing market’s peak, many waived this important step in order to be competitive with their offer.
100% of sellers offered to make at least some repairs when asked
A little over two-thirds, or 67% of buyers, asked for repairs, usually after the inspection came in and found the home lacking in some way. Only 31% of buyers dared to ask for repairs six to 12 months ago.
And get this: The average amount that recent sellers spent on repairs prior to listing was $14,163, according to the survey. That’s not peanuts.
Sellers still have some advantages
Despite this gradual shift in buyers’ favor, there’s still a degree of good news for sellers—such as some homes continuing to sell at lightning speed.
The survey reports that 22% of people who sold within the past month said their home went under contract in less than a week. That is up, believe it or not, from 14% of the people who sold six-to-12 months ago.
And don’t assume home sellers are unhappy with this turn of events, either. “At the same time, it’s worth noting that the majority of recent sellers are still satisfied with the outcome of their home sale,” Ratiu says.
In a perfect world, both buyer and seller are happy with their transaction, right?
For this and related articles, visit Realtor.com