What is a ‘housing concession’ and how does it benefit you?

NORTH ALABAMA (WHNT) – More and more people are moving to the Tennessee Valley every day. Home prices are rising, and mortgage interest rates are making it tough for some residents to buy a place to call their own.

Now, sellers and builders are getting creative to make sure their homes make it off the market. Sellers are even using incentives called “concessions” to their advantage.

“Right now some people are having to get smaller loans to get into homes that 2 years ago they could’ve afforded a little higher price home, and that’s not the case right now,” Re/Max Alliance Associate Broker Stephanie Schrimsher told News 19.

The average mortgage interest rate sitting around 7 percent makes it harder.

“The rates have changed a lot of things for a lot of people,” she added.

Schrimsher has been a realtor in North Alabama for years. She says the Huntsville market is beginning to cool slightly after a pandemic boom. Despite the sturggle, hundreds of houses are still being purchased citywide each month.

“More concessions are being offered than I’ve ever seen in my almost 2 decades in the industry.”

Concessions are incentives, most commonly from the seller, to get a deal across the finish line. For some buyers, those concessions can turn the dream of owning a home into a reality.

“Buying home warranties, they’re helping when requests for repairs come back so we’re seeing sellers do different things to get people into their homes,” Schrimsher said. “Having a good agent going in and educating a seller up front, ‘Hey, you may have to offer more concessions, you may have to pay more closing costs, you may have to do more repair costs,’ and most sellers are willing to do that.”

Builders are working hard to make deals. With entire neighborhoods to sell, concessions have become a major tool to close deals quickly.

“The blinds, the refrigerator, some closing costs when you work with your preferred lender. Those closing cost numbers — concessions have gone up considerably with most of the production builders here in town,” Schrimsher told News 19. “It comes off the bottom line of their margin, but it costs money to carry that inventory.”

Eddy and Kristen Lowe have been through the process of buying and selling a home 9 times. The concessions they’re seeing are there to sweeten the deal because prices aren’t coming down.

“They don’t really want to come off the house, so you’re asking for things, knowing you’re most likely not going to get money off the house,” Kristen said. “It’s going to be those concessions instead, but the rate buydown is great!”

The Lowes are interested, but not sold. A lot of the new construction they’ve looked at feels too similar.

“You’re buying exactly what they wanted to put in the house. You don’t want to buy a brand new house and spend top dollar, then have to go in and get what you want,” Eddy told News 19.

The Lowes haven’t decided what kind of home they’ll buy — newer or older — but their pre-owned home sold without a lot of concessions.

“I can’t compete against the tract builders or custom builders. They’ve got millions of dollars, I don’t.”

It’s clear that right now there are deals to be made on houses new and old.

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