Hear ye! Hear ye! Housing buyers, have you ever heard of a seller’s concession when offering to purchase a home? You may have already, but buyer beware whether it is advantageous to you in the midst of an intense competitive market.
Despite higher interest rates and concern with the country’s economy reflecting spiraling prices on goods and services swiftly escalating, the saga of long lines at open houses and competitive bidding when purchasing a home is still ironically ongoing and fierce.
Suggestions for buyers to outbid other offers range from removing the inspection contingency or mortgage contingency and/or offering over the asking price to procure the winning offer.
Seller concession is another term to be considered which is truly advantageous for the buyer only. When a buyer is low on cash and prefers a 10/15K cash advance to cover the closing costs which would be embedded in the terms of the mortgage amount, the purchaser proposes an increased higher offer. This offer comes with the caveat that they receive back cash at closing with typically the purpose of covering their closing costs. This is exactly what happened on a recent transaction I was working on. As an example, here’s the scenario. The buyer’s offer was $615,000 on a house that was listed at $600,000 with the proviso that $15,000 is returned back to the buyer at closing.
In this case, the buyer’s purpose was to use that buy back money to reduce the points, which is his prerogative, and insisted that his plan would be attractive. However, the buyer lost out and his bid was not accepted in comparison to other offers over asking without a concession.
It was a good strategy, so it seemed. An astute seller needs to consider all offers and what is advantageous and most profitable for his choosing the right candidate. And the winner is—not necessarily the buyer who had increased the offer for the seller concession which was written into the contract. There is no blindside for a seller with a competent astute agent explaining the difference and shortfalls that a seller concession might provide.
Be cautious that a caveat such as a seller’s concession could muddy the waters and, as they say, be the deal breaker. The goal is to get a “piece of the rock” and with this aforementioned strategy, it did not work in competition to 10 other offers. Sometimes clarity of an offer without additional provisions is more attractive for sellers.
Anyone knowledgeable in the real estate market today recognizes that terms of an offer are as important as the offer itself.
Moving on to now assess today’s housing market. According to the latest information from the National Association of Realtors, national existing home sales climbed 0.2% from the previous month but were down 20.4% compared to same time last year due to fluctuating mortgage rates and a near all-time low level of inventory which continues to influence home sales.
Monthly snapshot results in New Jersey MLS (Multiple Listing Service) showed a one-year change in closed sales of all properties reduced -21.4%, one year change in Homes for Sale all properties reduced -48.1%, with an increase of 3.8% for median sales price on all properties.
Across the board, closed sales were down on single family homes and townhouse condo units, yet adult communities closed sales were up 5.0%.
Median sales prices increased for single family homes, up 3.9% to $665,150, as well as adult communities, up 15.4% to $465,000 and townhouse-condo decreased 2.9% to $417,500.
Finally, as demand continues to outpace supply, properties are still selling quickly with a time frame noted of less than a month for sale on the market.
Does that paint a picture of today’s real estate? Well, for now but stay tuned, and remember home is where your heart is … go for it!
Ruby Kaplan is a realtor licensed in both New Jersey and New York. Visit rubykaplan.exprealty.com for more information. The Ruby and Bobby Kaplan team/EXP Realty/ will promote your home with the best of social media and create alerts for your criteria of housing needs. Your housing needs are our priority! Ruby can be reached at (201) 314-4152 or on her cell at
(917) 576-4177 or at [email protected].
