By Gay Cororaton, MIAMI REALTORS Chief Economist
With mortgage rates rising to an average of 6.8% in March 2024, home prices up about 80% since 2019, active listings up 48% from one year ago, and the condominium market now a buyer’s market, more sellers are contributing to the costs associated with buying a home.
According to our analysis of about 38,000 MIAMI MLS listings that sold during January-March 2024, 24% of single-family properties listed on the MIAMI MLS sold with a seller concession, a higher share than in 2021 (15% in 2021). Among condominium sales, 13% had a seller concession (8% in 2021).
The median seller contribution as a percent of the sales price rose to 1.3% for single-family homes (1.0% in 2021) and 0.9% for condominiums (0.8% in 2021). On a $600,000 home, a buyer receives about $8,000 in seller concessions.
Sellers can contribute to costs like the closing cost (e.g., appraisal fees, mortgage fees, settlement fees, title insurance, prepaid property taxes and home insurance), payment for home inspections, repairs, a home warranty policy purchased for the buyer, or mortgage rate buydowns.
Nearly 40% of Properties That Sold Between $250K-$750K Got a Seller Concession
The lower the price, the more sellers appear to be willing to offer a concession. In January 2023-March 2024, 38% of single-family properties that sold between $250,000 to $500,000 received a seller concession with a median of 1.5% of the sales price. Among properties that sold at $500,000 to $750,000, 38% received a concession, typically at 1.1%.
Among condominiums, 43% of properties that sold between $250,000 to $500,000 received a concession, with a median of 0.8%.
Seller Concessions More Likely If Price Has Not Been Reduced
Sellers are likely to provide a concession if they have not lowered their selling price from the original list price. In January 2023-March 2024, only 15% of sellers of single-family homes who sold the home at a 10% discount gave a concession. In contrast, 28% of sellers who did not reduce their price provided a concession. In the condominium market, 9% of sellers who cut their price by 10% provided a concession, while 16% of those who did not cut their price gave a concession.
Seller Concessions are Associated with Fewer Days on the Market
Among single-family properties less than $1 million[1], 22% of sellers whose homes were on the market for 14 days or less offered concessions compared to 27% among sellers whose homes were on the market for 61 to 120 days. However, the fraction declines to just 11% of home sellers whose homes were on the market for over 365 days. The reason for the decline could be that home sellers may have decided to drop their list price and were no longer as willing to offer concessions.
Among condominium properties less than $ 1 million, 14% of sellers whose properties were on the market for 15 to 31 days offered a concession of 1% but only 8% among owners whose properties were on the market for over 365 days offered a concession and the concession dropped to 0.6% of the sales price.
What This Means for REALTORS®: Higher mortgage rates and sustained price apprecation have made a home purchase more challenging for buyers. At the same time, supply conditions are improving. Seller concessions can help both buyers and sellers move towards a successful closing.
See the data in the attached report.
[1] For this tabulation by days on market, only properties less than $1 million as homes over $1 million tend to stay longer on the market as there are inherently fewer buyers.
