If you’re in the market for a new home, there’s encouraging news: buyers are starting to regain negotiating power. According to a November 2023 Redfin report, buyers received concessions from sellers in 35% of U.S. home sales during the three months ending October 31, 2023. This is a significant increase from 27.6% two years earlier. And these concessions aren’t just limited to price reductions—sellers are increasingly covering closing costs and even taking on home repairs to seal the deal.
Why the Shift?
As mortgage rates continue to climb and buyer demand cools, sellers are more willing to make concessions to close a sale. This shift creates new opportunities for buyers, but many still aren’t fully aware of the bargaining chips available to them. Jason Gelios, a real estate agent at Community Choice Realty in southeast Michigan, explains, “Many times, home buyers aren’t aware that they can negotiate for things other than a home’s sale price.”
To help you maximize your negotiating power, here are five things you can negotiate beyond just the home’s price.
1. Mortgage Rate and Lender Fees
With mortgage rates on the rise, many prospective buyers are holding off on purchasing until rates drop below 5.5%. As of May 2, 2024, the 30-year fixed-rate average has climbed to 7.22%, according to Freddie Mac. However, mortgage rates aren’t as rigid as they might seem.
“Buyers tend to let the lender set the rate, but the interest rate is often negotiable because lenders want their business,” says Gelios. This is particularly true in today’s market, where lenders are vying for a shrinking pool of buyers. Don’t hesitate to shop around for the best rate. A LendingTree survey from May 2022 found that nearly half of borrowers who compared rate offers discovered that the first quote they received wasn’t the lowest. Freddie Mac’s study further highlighted that buyers who obtained multiple rate quotes could save hundreds of dollars annually.
2. Closing Costs
Closing costs, which can amount to 2% to 5% of the home’s purchase price, are another area where buyers can negotiate. In a buyer’s market, it’s not uncommon for sellers to cover a portion or even all of these costs to make their home more attractive to buyers. This can significantly reduce your out-of-pocket expenses at the closing table.
3. Home Repairs
In today’s market, many sellers are willing to foot the bill for repairs, especially if the home inspection reveals issues that could be deal-breakers for buyers. Instead of walking away from a potential purchase, you can negotiate with the seller to have necessary repairs completed before closing, or to receive a credit towards the cost of these repairs.
4. Home Warranty
A home warranty can provide peace of mind by covering the repair or replacement of major home systems and appliances. This is another cost that buyers can negotiate with sellers. If the home is older or if there are concerns about the condition of major systems, you can request that the seller include a home warranty as part of the deal.
5. Move-In Date and Possession Terms
Flexibility with the move-in date and possession terms can be a valuable negotiating tool. For example, if the seller needs extra time to move out, you could offer a rent-back agreement, where the seller rents the home from you after closing. On the other hand, if you need to move in quickly, negotiating an earlier possession date could be beneficial.
Maximizing Your Negotiating Power
In today’s shifting market, buyers have more leverage than they might realize. By understanding the full range of negotiable items—from mortgage rates to home repairs—you can enter the market with confidence and potentially save thousands of dollars. To make the most of these opportunities, work with an experienced real estate agent who can guide you through the negotiation process and help you secure the best deal possible.
So, don’t just focus on the sale price. Take advantage of the broader negotiating landscape and use these strategies to your benefit as you navigate your home purchase.