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  • Writer's pictureMark Madero

REO & Concessions

What are concessions? These are costs or repairs that a seller agrees to pay on behalf of the buyer. These can include but are not limited to: bank fees, property taxes, HOA fees, inspection fees, recording fees, appraisal fees, mortgage points, or costs of repairs to the property. Sometimes it is a specific dollar amount, or it can be a percentage of the purchase price. Typically, we don’t see as many concessions in a fast-paced market, as we have seen in the past few years. When homes are selling quickly and at a premium price, sellers are less likely to accept an offer with too many concessions. They will simply wait a little longer for the next buyer.


Let’s look at the numbers in our area. This data comes from the North Florida MLS for Columbia and Suwannee Counties. It shows that there has been a constant decrease in the number of sales with concessions over the past several years. This is very much in line with what typically happens as property values increase and quicker marketing times (see the previous post).

Now let’s look at REO sales. What is that? The term real estate owned (REO) is a lender-owned property that is sold as a foreclosure. This happens when a homeowner can no longer pay the mortgage. Short sales are similar, but the owner still maintains ownership of the property. Usually, it is upside down (meaning the home is worth less than the mortgage payoff balance), which is extremely rare in the current market. REO/Short Sales have been very low and have been trending downward over that few years.


Bottom Line: The trends have been very good for the past few years regarding seller concessions and REO sales. For the most part, sellers have not needed to offer concessions in order to procure a sale. REO sales are at an all-time low, which makes perfect sense. If you can’t pay for your house, you can always sell it for a profit or refinance with better terms. 2023 will be a year to watch as interest rates continue to climb giving buyers less purchase power and when you add the cost of inflation to the equation, it makes for even less bang for your buck. If you need any help or want additional information, please reach out to me. Thanks for visiting and hope to see you soon.

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