Where buyers and sellers are finding common ground
A new survey by Opendoor found that a high percentage of home buyers and sellers are willing to make some concessions in order to close a deal.
- 76% of sellers and 80% of buyers said they would consider making certain concessions.
- Areas where buyers and sellers tend to be the most flexible included the closing date followed by who pays for inspection fees.
- Baby boomers were more likely to say they would offer below the list price, while millennials were more likely to offer above.
In this tough market, something's gotta give — and there are signs that both buyers and sellers are willing to negotiate.
A new survey from Opendoor found that 76% of sellers and 80% of buyers are willing to make some concessions in order to close a deal on a house. Flexibility on the closing date, paying for inspection fees, negotiating the list price and paying for closing costs were the top areas where buyers and sellers were willing to bend.
Less common concessions included negotiating repairs and paying for a home warranty.
The possibility of negotiation is a welcome change for buyers, who in recent years have faced a strong sellers market where sellers had little motivation to budge.
Now that the market has fewer buyers due to elevated interest rates, conditions are slightly less favorable to sellers, creating more opportunities to meet in the middle, said Nick Boniakowski, head of agent partnerships at Opendoor.
That's important because this period of transition has meant that sellers need to adjust their expectations.
"So you have sellers that go on the market expecting one thing, and they're not getting multiple offers, which means they do have to be a little more flexible," Boniakowski said.
Finding common ground
Perhaps surprisingly, only 34% of survey respondents were concerned about the lack of housing supply. But 72% were worried about affordability, a byproduct of low inventory.
And even though tight inventory is giving sellers an advantage in many parts of the U.S. this spring, the survey found that sellers can identify with the challenges today's buyer's are facing — in part, because 72% of sellers are also buyers.
That perspective shows up in questions around interest rates, which concern both buyers and sellers, and nearly all respondents — around 93%, according to the survey — believe homes are overpriced.
Sellers may empathize with buyers, but they still want to get the best price they can for their home. That usually makes them more willing to negotiate in other areas, like the closing date.
Opendoor said that's consistent with the transactions they're seeing. Closing dates are "one place where buyers and sellers can really agree right now," Boniakowski said.
Still, many potential sellers are simply unwilling to give up their low locked-in interest rates, which means a greater share of inventory is newly constructed homes. That can be good news for buyers, because homebuilders may have more financing options.
"When you're buying a home, you're really signing up for a monthly payment, and homebuilders do have flexibility in some of these programs," Boniakowski said, adding that lenders can also help buyers find better financing options for existing homes as well.
Mismatched expectations around asking price
As for the actual offer price, buyers and sellers reported diverging expectations, with buyers hoping to get a deal. Among potential buyers, 73% intend to come in with an offer below the list price, but only about half that number of sellers — 37% — expect to receive an offer below their asking price.
Just 21% of buyers believe they'll need to offer above the list price, but 36% of sellers expect buyers to make an offer over asking.
There were some generational differences, however. Baby boomers appear to be more frugal (or perhaps patient): They were more likely to say they would put in an offer below the list price, while millennials were more likely to put in an offer above the list price, according to the survey.