For the past few years, it’s been mostly a seller’s market. But dynamics are shifting as inventory is increasing around the country. For instance, in Washington DC, inventory is up to 4.6 months of supply versus the 5 year average of 2.6 months. At a minimum, the market is balancing out a bit. Perhaps it is moving to a buyers' market, which will be an interesting change after so many years of a hot sellers' market. As a result, some sellers are finding they need to be more flexible to close a deal. One strategy that can help? Offering concessions is a good way to make the deal more attractive to get to the closing table. Yes, it may result in less money to the seller if you compare it to what you might have made last year or the year before, but it is useful to remember that for most sellers, there is a lot of equity in that sale price, thanks to the tight sellers' market during covid.
What Are Seller Concessions?
Concessions are homebuying costs that a seller agrees to cover as a way to get their house sold. And based on data from the National Association of Realtors (NAR), nearly 1 out of every 4 sellers (24%) offered a concession in 2024. Here are a few of the most common types of concessions:
- Covering Closing Costs: The seller pays for part (or all) of the buyer’s closing costs, like appraisal fees, title insurance, or loan fees.
- Price Adjustments: Instead of making repairs, a seller might lower the purchase price to make up for updates the buyer will need to tackle.
- Adding a Home Warranty: A seller may throw in a home warranty, giving the buyer peace of mind key repairs will be covered in the first year.
And don’t worry. This doesn’t mean you have to come up with more cash to make it happen. These are things that get subtracted from your profits at closing – not more funds you have to bring to the table. And not all concessions are about money. Sometimes it is about good will that doesn't cost you anything.
You can throw in extras that you no longer need or want. For instance, if your buyer is coming from an apartment and has never had a yard before, they may ask if you’d be willing to leave your lawn mower behind. When I bought my current home, the seller was divorcing and downsizing into a townhouse. He offered to sell me his snow blower (which I could have used) at the price of a new snow blower. I said no and I have often wondered what he did with that snow blower in his new townhome. I had a seller recently who needed to get rid of some things that he would not need in his new home such as ladders, an old lawnmower and power washer. He too asked for a ridiculous price and ended up instead having to pay someone to trash everything. In other words, if you can give your buyer something that you don't want but is useful to the buyer, then do it and don't try to monetize the transaction. You just might blow it.
How Concessions Help Sellers
Offering concessions can be a smart strategy for sellers to get a deal done. As Dennis Shirshikov, Professor of Finance and Economics, City University of New York/Queens College told The Mortgage Reports:
"Pricing homes realistically and being willing to offer concessions, such as covering a portion of closing costs or including upgrades, will be key to closing deals . . . in a less frenzied market.”
A concession can be a great way to meet in the middle. It’s important to remember that your goal is to sell your home. In the DC metro area as more buyers become anxious about their professional futures, there may be more interest in renting rather than buying. Those buyers that do come forward are enjoying greater choice in inventory and they can finally enjoy being picky about the homes they offer to purchase. Sellers are going to have to adjust to the new paradigm of more competition.
A good real estate agent can help you decide when and how to offer concessions, so you don’t give away too much while still ensuring your house gets sold. It’s all about finding the right balance. With the market becoming more balanced, seller concessions are coming back into play in some areas.
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