Rising inventory is motivating more sellers to resort to price cuts in order to successfully close … [+]
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The days of frenzied sales with waived inspections might be behind us as buyers regain a bit of bargaining power. According to a new Realtor.com survey, 92% of people who sold their home within the last year accepted some buyer-friendly terms and 41% accepted some contingencies to entice buyers into signing contracts.
Additionally, among those surveyed, the number of buyers asking for repairs based on the inspection results more than doubled in recent months and the number of sellers refusing to make repairs dropped to zero. Whether it be financing, timing, repairs or flexibility, the art of negotiation is returning to the housing market.
Realtor.com surveyed 449 people who sold their home within the last 12 months. To highlight the shifting market, responses were collected based on how long ago the home sold.
“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 home buyers,” said George Ratiu, Realtor.com’s manager of economic research. “The combination of higher mortgage rates and prices have noticeably cooled demand over the first half of the year. In addition, 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. At the same time, even as we are seeing a shift toward a more buyer-friendly market, it’s worth noting that the majority of recent sellers are still satisfied with the outcome of their home sale.”
Room for negotiation
Despite the extremely competitive housing market of the past several years, the survey suggests that negotiation is back on the table – for price and contract terms. Homes that sold at or above-asking price peaked at 82% in February and March of 2022 when mortgage rates were below 4% and dropped to 69% for homes that sold within the last month when rates hovered near 6%. By contrast, the share of sellers who sold below asking price jumped from 18% in February and March 2022 to 31% for those sold within the last month.
Additionally, 92% of all recent sellers accepted some buyer-friendly terms. Those included:
- 41% Accepted some contingencies in the contract (appraisal, home inspection, home sale, financing, etc.)
- 32% Dropped the price because the home didn’t meet appraisal
- 32% Paid for some or all of the buyer’s closing costs
- 30% Had to be flexible on the ideal timeline for closing
- 29% Paid for repairs to the home after the appraisal
- 28% Were not able to rent the home back after closing despite asking to
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Inspections and repairs make a comeback
A professional home inspection is always a good idea for home buyers, but during the housing market’s peak, many buyers waived this important step to be competitive with their offer. Of those who sold within the last month, 95% reported that the buyer requested a home inspection, up from 82% of those who sold 6-12 months ago. More than twice as many buyers of homes that sold in the last month asked for repairs as a result of the home inspection (67%) compared to homes that sold 6-12 months ago (31%).The number of surveyed sellers who refused to pay for any repairs during that time dropped from 8% to zero.
Nearly all respondents (95%) who sold their home in the last month made some updates or repairs to the property prior to listing, compared to 71% who sold 6-12 months ago. The average amount that recent sellers spent on repairs prior to listing was $14,163.
Not all bad news for sellers
Despite the shifting market, homes are continuing to sell quickly. In fact, 22% of people who sold within the past month said that their home went under contract in less than a week. This is up from 14% of people who sold six to 12 months ago. Additionally, 92% of people who sold their home in the past month were satisfied with the overall outcome of their home sale, down slightly from the 98% who were satisfied six to 12 months ago. Nearly half (46%) of sellers in the last month were satisfied with the price of their home sale, compared to 72% of those who sold six to 12 months ago.
Changing needs motivate sellers
After two years of the pandemic, sellers’ needs have changed, prompting a search for another home. Of those who sold within the last year:
- 31% were looking for different amenities/features
- 29% found that the home no longer met the needs of their families
- 26% needed a home office for remote work
- 23% wanted to live closer to family and friends
- 20% felt they bought their home in a hurry and/or panic and decided it was not the right home for them
- 17% no longer needed to live near an office