By Chad Taylor
Are sellers making concessions? And by concessions I am not talking about providing snacks for potential buyers. Concessions in this column are the ones that sellers can make towards a buyer when a home sale is being negotiated. In the strong sellers market that we have been in for the last three years, sellers have rarely had to make concessions. And in some cases they are still few and far between. But the times they are a changing and we are now seeing seller concessions entering the picture again.
So as the market continues to shift out of the strong seller’s market, here are a few concessions that sellers may have to consider when selling their home.
Price concessions. Over the last three years, in many areas, sellers have come to see the list price as a starting point. Due to the high demand, sellers have become accustomed to receiving multiple offers on their homes and pricing concessions have been a thing of the past. But that is changing. Price adjustments are becoming more prevalent as sellers do their best to stay in line with fair market value. When an offer is received it is very important to remember (as a seller) that it is not about where you start out in the negotiations. It is about where you end up. Therefore, if you receive a “low ball” offer on your home, don’t take it personally. Just counter and see where you end up. It is also important to know which homes have sold in your neighborhood in the last 90 days or so and for what percentage of original list price did they sell. If the average home in your neighborhood is now selling for 96 percent of original list price it may be unreasonable for you to expect full list price. Especially if you have been on the market for a while.
Closing cost concessions. It has been over three years since I have had a seller pay any of their buyer’s closing costs as part of the sale. That is until the last month. This could be good news for many buyers out there who would love to purchase a home yet do not have the down payment plus all of their closing costs as well to make a purchase. Again, during the strong seller’s market, if a buyer needed closing costs paid either the seller simply said “no” or they added the closing costs to the sales price and made the buyer finance their own costs. The latter is not a bad solution, however, it is not really a concession in that example. At this point we are not seeing sellers pay all of a buyer’s closing costs which could average $4,000-$5,000 depending on the purchase price. We are seeing sellers pay closer to half of the total closing costs at this time. But that could change as the market continues to shift.
Repair concessions. Same song, third verse. Due to the low inventory, buyers have not had the opportunity to expect too much over the last three years when it came to inspection repairs. Many of our listings have sold in “as-is” condition over the last few years. In other cases, the sellers were still able to hold a pretty hard line when it came to repairs that were uncovered during the inspection process. As the market changes and inventory goes up, buyers will be able ask more of the seller when it comes to inspection related repairs. I have said before that in a buyer’s market, it truly is a “price war and a beauty contest” all at the same time. It also becomes a “condition contest”. When buyers have options, they also reserve the right to walk away from a contract and move on to another home if a seller is not willing to address realistic repair requests. So what is realistic? My stance is that inspections were designed to uncover material defects of the home that neither buyer nor seller were aware of prior to contract. In addition, the goal of the inspection process is not to make the home new again. The goal is to identify safety issues, health concerns, or structural issues that should be addressed. Home ownership is wonderful and it comes with responsibilities. The inspection period should not be a time when a buyer gives the seller a laundry list of “honey dos”, if you will, in order for the buyer to shirk said responsibilities.
If you are curious about other affects that the shifting market will have on buyers and sellers in the upcoming days, please feel free to email me with your questions. I am here to help.
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.