Home buyers may have More Negotiation Power now

Did the frequency and intensity of bidding wars over the past two years make you, as one of the home buyers, put your home search on hold? If so, you should know the hyper competitive market has cooled this year as buyer demand has moderated and housing supply has grown. Those two factors combined mean you may see less competition from other home buyers.

With less competition comes “more” opportunity. Here are two trends that may be the news you need to reenter the market.

  1. The Return of Contingencies

Over the last two years, more home buyers were willing to skip important steps in the homebuying process. For example, buyers would waive the appraisal or the inspection to gain an advantage in a bidding war.  But now, things are different.

The latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving their home inspection or appraisal is down. And a recent article from realtor.com points out more sellers are accepting contingencies:

“A year ago, sellers were calling all the shots and buyers were launching legendary bidding wars, waiving contingencies, and paying for homes in cash. But now, the shoe is on the other foot, and 92% of home sellers are accepting some buyer-friendly terms (frequently related to home inspections, financing, or appraisals), . . .

This doesn’t mean we’re in a home buyers’ market. It does mean you have a bit more leverage when it comes time to negotiate with a seller. The days of feeling like you may need to waive contingencies or pay drastically over asking price to get your offer considered may be coming to a close. In my opinion, it is getting toward a healthy real estate market even though some agents might not agree with me.

  1. Sellers Are More Willing To Help with home buyers Closing Costs

Before the pandemic, it was a common negotiation tactic for sellers to cover some of the buyer’s closing costs to sweeten the deal. This didn’t happen as much during the peak buyer frenzy over the past two years.

Today, data suggests this is making a comeback. A realtor.com survey shows 32% of sellers paid some or all of their home buyers closing costs. This may be a negotiation tool you’ll see as you go to purchase a home. Just keep in mind, limits on closing cost credits are set by your lender and can vary by state and loan type. Work closely with your loan advisor to understand how much a seller can contribute to closing costs in your area.

Bottom Line

Despite the extremely competitive housing market of the past several years, today’s data suggests negotiations are starting to come back to the table. To find out how the market is shifting in our area, let’s connect today.

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