You May Have More Negotiation Power When You Buy a Home Today
Did the frequency and intensity of bidding wars in the last two years cause you to put off your home search? If this is the case, you should be aware that the hyper-competitive market has cooled this year as buyer demand has moderated and housing supply has increased. Because of these two factors, you may face less competition from other buyers.
Less competition means more opportunities. Here are two trends that may be just what you need to get back into the market.
1. The Return of Contingencies
Over the last two years, more buyers have been willing to forego critical steps in the home buying process, such as appraisals and inspections, in order to gain an advantage in a bidding war. Things are different now.
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 buyer's market, but it does mean you have a little more negotiating power with a seller. The days of feeling like you need to waive contingencies or pay significantly more than the asking price to have your offer considered may be coming to an end.
2. Sellers Are More Willing To Help with 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 buyer’s 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.
Despite the extremely competitive housing market of recent years, today's data suggests that negotiations are beginning to return to the table. Connect with your local real estate advisor today to learn more about how the market is changing in your area.
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