‘Deals available:’ Homebuyers should claim this promotion while they are eligible

The housing market is finally turning in buyers’ favor, and that means they can get more than a decent deal on a home.

About 42% of homes sold in the last three months of 2022 included some kind of rebate from the seller, up from just 30% in the previous quarter, according to Redfin data. These incentives include lower mortgage rates, closing costs, and cash for repairs and home appliance warranties. A separate study found that 13.6% of sellers also lowered their listing prices to attract buyers.

For homebuyers, the increase in concessions means that the days of forgoing contingencies and inspections are over and they will have more bargaining power when buying a home. But according to one expert, buyers need to act fast because the potential increase in competition could discourage sellers from negotiating long-term.

“Everyone has different motivations and goals. Every market is different, but deals need to be made now,” real estate agent Monte Miner of Ironwood Fine Properties told Yahoo Finance.

What to ask for.

More protection

Rick Nazarro of Colonial Manor Realty, Revere, MA, talks to a pair of interested buyers in the driveway as a couple waits to get into a property he’s trying to sell. (Credit: Blake Nissen for The Boston Globe via Getty Images)

The days of waiving contingencies like appraisals and ongoing inspections are in the rearview mirror. Again, contracting activity remains somewhat competitive depending on your location.

At least 24% of buyers have given up on the inspection contingency in December 2022, according to a National Association of Realtors confidence survey. An additional 24% of buyers declined the possibility of an appraisal in December, up from 16% in November and 21% a year ago.

Home inspection contingencies are especially important because they can tell you if there is a problem with the property transaction before the purchase takes place. It can also help negotiate repairs with the seller, which are increasingly common in today’s market.

“If buyers have this short window to buy where they can get incentives to buy, [they] They prefer to buy where they can really think about it, do their due diligence, get a financing contingency and not rush,” Jeff Reynolds, a Compass broker and founder of UrbanCondoSpaces.com, told Yahoo Finance.

Mortgage assistance

Last year, when mortgage rates rose at the fastest rate in more than 50 years, many homebuyers still in the market opted for lower mortgage rates to ease the financial burden on their home loans.

A buyout is often a strategic option that some borrowers use to lower interest rates by paying discount points at closing. Discount points, or mortgage points, are paid only once at closing and can lower your interest rate over the life of your loan.

“When the culture went up in the top 7, we were seeing a lot of demand for the 2-1 buy,” Miner said. “When this happens, the buyer is hoping to refinance in most cases within the next two years. With tariffs [in 2023] potentially less than 6%, but I see that as a possible but less likely scenario.”

In some cases, the seller may even offer to pay points to offer a temporary interest rate discount – only applicable for the first few months of your loan. This can make your mortgage payments more affordable at the beginning of your loan.

Reduce your closing costs

As demand remains low, some home sellers are incentivizing buyers by offering to cover all closing costs.  (Credit: Getty Creative)

As demand remains low, some home sellers are incentivizing buyers by offering to cover all closing costs. (Credit: Getty Creative)

One of the biggest costs a buyer faces when buying a home is paying closing costs. These fees may include fees for appraisers, home inspectors, real estate agents, attorneys, and your lender to name a few.

According to Realtor.com, closing costs on home sales are often between 2% and 7% of the home’s purchase price. That means a buyer who bought a home in December for a median price of $400,000 could face closing fees of between $8,000 and $28,000.

Although home sellers and buyers generally split the costs of closing services and fees, these days sellers are offering to pay most or all of the closing costs to make a sale.

John Downs, senior vice president at Vellum Mortgage, told Yahoo Finance: “One of the factors that put buyers off last year was that they said, ‘I don’t have enough money for closing costs.’ for you.”

Ask for a discount

Buyer is considering a new home in an open house in Plantation.  (Credit: Carline Jean/Sun Sentinel/Tribune News Service via Getty Images)

Buyer is considering a new home in an open house in Plantation. (Credit: Carline Jean/Sun Sentinel/Tribune News Service via Getty Images)

Home prices are finally coming off their highs, and on top of that, a growing number of sellers are offering further discounts to attract buyers.

According to Realtor.com, the median list price rose from $369,000 in January 2022 to $449,000 in June — a 21% increase. As of December, the median home price fell to $400,000, about 8.4% higher than a year ago.

At a current rate of 6.33%, some homebuyers still face barriers to affordability. Realtor.com found that the cost of financing 80% of a typical home remains 58.9% higher than a year ago, leaving some buyers on the sidelines.

Fortunately, price cuts are becoming more and more common, and it’s okay to ask for a price cut. In fact, some agents encourage it.

“Instead of waiting for listing prices to come down, buyers are submitting offers at really big discounts and forcing the seller to make a decision,” Downs said, noting an increase in markdowns in Washington. field.

For example, the percentage of homes with a price reduction increased to 13.6% in December from 7.1% a year ago. That percentage was higher than before the pandemic, but lower than the percentage seen in 2018 (14.8%), according to Realtor.com.

Downs added: “Buyers are setting the tone for the housing market this year and sellers are listening.”

Act quickly

A subdivision home built by Pulte Homes is seen in Novi, Michigan.  (Credit: Rebecca Cook, REUTERS)

A subdivision home built by Pulte Homes is seen in Novi, Michigan. (Credit: Rebecca Cook, REUTERS)

Home buyers who want to take advantage of their chance to negotiate should act quickly before the spring selling season begins.

A surge in buying activity in the weeks to Jan. 15 pushed the median U.S. home sales price up 0.9% from a year ago to $350,250, the largest increase in a month, according to Redfin.

According to the Mortgage Bankers Association, the volume of mortgage applications for purchases increased by 25% in the week ending January 13. While this is still 35% below activity levels a year ago, the pool of buyers is likely to continue to grow as prices fall.

“I have a property worth $375,000 and we’ve already had 20 offers. Two of them are full price and one is above price,” Miner said. “At this time, buyers will not have a chance to get any concessions related to that property.”

Gabriella is a Personal Finance Correspondent at Yahoo Finance. Follow him on Twitter @__gabriellacruz.

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