In a market of elevated prices, negotiations have become an important tactic to help homebuyers save money. In fact, 63% of homebuyers have negotiated home price reductions, according to a new report from LendingTree.
LendingTree’s new report surveyed nearly 2,000 U.S. consumers about their negotiation experiences while buying a home, and found that 38% of buyers who negotiated did so with closing costs, while 36% had sellers pay for repairs. However, 24% of buyers say they regret making certain concessions when haggling.
The report also found that men (67%) were more likely to negotiate home prices than women (60%). By age group, Gen Z homebuyers were the most likely to negotiate home prices, at 67%. That’s followed by: Gen Xers (64%), Baby boomers (63%), and Millennials (61%).
Key highlights:
- Prospective homebuyers aren’t strangers to price haggling, but the real savings is in the home loan—and most aren’t taking advantage. Only 39% of homebuyers say they negotiated the initial APR or refinance rate on their most recent home purchase, even with a success rate of 80%.
- Men (45%) were more likely to negotiate their home loan terms than women (34%). By age group, younger homebuyers were more likely to negotiate these terms than older consumers. Gen Z homebuyers were the most likely to do so, at 49%, followed by: Millennials (44%), Gen Xers (37%), Baby boomers (ages 59 to 77) (31%).
- Homebuyers with children younger than 18 (47%) were significantly more likely to negotiate these terms than those with no children (38%) and those with adult children (33%).
- Among those who negotiated these terms, the success rate was 80%. Gen Zers (88%), those making six figures or more (84%), parents with children younger than 18 (83%) and millennials (83%) were the most successful.
- Negotiating a lower APR could greatly impact how much you pay over the lifetime of your mortgage. With a $350,000 30-year fixed-rate mortgage with a 6.50% APR, even just a quarter-point reduction to 6.25% translates to a savings of $57 a month, $684 a year or $20,520 over the life of the loan—a significant difference compared to a few thousand dollars off the listing price.
- Almost a quarter of homebuyers (23%) say they’ve negotiated too hard and lost a home they wanted to buy.
- Meanwhile, others wish they would have pushed for more. Of the 36% of buyers who say they wish they negotiated harder, 40% say fear of losing the home held them back, 25% say they lacked confidence in their negotiating skills and 22% say they didn’t know that they could negotiate.
- The market could be shifting toward buyers, as only 42% of sellers are likely to negotiate (versus 63% of buyers)—still, regret is common regardless of position.
- About a third of sellers (34%) say they’ve settled for a lower price and/or paid for repairs, and 27% say they’ve covered closing costs. And although it may have seemed right then, 32% of sellers say they regret the concessions they offered to make the sale.
Major takeaway:
Though most people don’t attempt it, LendingTree senior economist Jacob Channel said that asking your lender for a lower rate on your mortgage when you’re buying or refinancing can pay off—especially if you’ve got a high credit score and little debt.
“While your lender won’t always accommodate your request, it doesn’t hurt to ask,” he says. “If you successfully negotiate a lower rate—even a modest one of around a quarter of a percentage point—you could potentially save tens of thousands of dollars in interest over the lifetime of your loan, depending on factors like the size of your loan and the specific mortgage rate you received.”
“Today’s housing market is tough, but sellers are nonetheless more willing to negotiate with buyers than over the past two years. In the same way that asking your lender for a lower rate can help you save money, so too can asking a seller to cover things like closing costs or to pay for repairs,” Channel continued. “In some instances, an overly aggressive buyer can alienate a seller and lose out on a chance to buy a great home. With that in mind, while buyers are well within their right to ask for concessions from sellers, they should always be polite and reasonable.”
But even in a slow housing market like this current one, Channel explained that sellers shouldn’t feel obligated to accommodate every potential buyer.
“While making a few reasonable concessions can help you sell your house faster, you shouldn’t be so quick to do whatever a buyer asks that you overcompensate and make more sacrifices than what would’ve been necessary to sell your house,” Channel concluded. “There’s a big difference between being completely unreasonable as a seller and holding your ground on certain issues.”
For the full report, click here.
