Builders and sellers are making the deal more appealing to buyers by offering things like paid closing costs, lower mortgage rates, and more. This is especially true in areas where the number of homes for sale is growing. It’s known as a concession or an incentive in the business world.
What Are Concessions and Incentives?
A seller or builder gives you something extra to help you buy something. This is known as a concession or an incentive.
- Someone sells something or agrees to do something in exchange for a deal. This is called a concession.
- An incentive, on the other hand, is a benefit that a seller or builder advertises and offers right away to get people to buy.
Today, some of the most common ones are:
- Help with closing costs
- Mortgage rate buy-downs (to temporarily lower your rate)
- Discounts or price reductions
- Upgrades or appliances
- Home warranties
- Minor repairs
Getting any of these things for free can be a big deal for buyers, especially if they are on a tight budget. It is said by the National Association of Realtors (NAR):
They may be able to help lower the initial costs of buying a home.
Builders Are Making It Easier To Buy
Plus, more than one builder is willing to do this. This method is being used by a lot of builders these days. As Zonda puts it:
“Incentives were still popular in March. Builders offered them on 56% of homes that were still being built and 74% of homes that were ready to move into within 90 days.”
They don’t want to keep stock for too long, that’s why. They need it to sell. The National Association of Home Builders (NAHB) says that price changes are one way that many builders are keeping their inventory moving and not just sitting there.
Price cuts were made by about 30% of builders in each of the first four months of the year. This does not mean that most builders are lowering prices, but it does mean that some are ready to work with buyers to make a deal.
This is not a sign that the market is going to fail; it’s a chance for you. Most builders offer incentives, and about three out of ten are lowering prices. This means that if you’re interested in buying a newly built home, your builder will probably try to make it easier for you to close the deal.
Existing Home Sellers Are Offering More, Too
This means that sellers have more competition since there are more existing homes on the market. An existing home is one that has already been lived in. That’s why, in March, more than 44% of sellers of existing homes made deals with buyers.
And if you look at this graph from before the pandemic, you can see that 44% is pretty much back to normal. The market is now balanced again after years of sellers having all the power. This could be good for you if you are a buyer.
But keep in mind that discounts don’t always mean big ones. Price is something that more sellers are willing to give up, but it’s not always what they do. There are times when the seller can just pay for repairs, leave appliances for you, or help with the closing costs.
Over the last 5 years, home values have gone up by more than 57%. Small price cuts are a great way for sellers to make their homes more appealing to buyers while still making a profit.
Bottom Line
It doesn’t matter if the house you want is brand new or a little older; there are probably discounts or other incentives that can help you get it.