Inman News
Negotiation headaches and economic jitters are pushing homebuyers to walk away from contracts at higher rates, according to Redfin’s latest. Cancellations are highest in Texas in Florida
As Halloween draws near and our minds become preoccupied with witches, wraiths and suddenly seized souls, homesellers are focused on another horror: the growing number of homebuyers backing out of the market.
Redfin’s latest report, which is based on multiple listing service (MLS) pending sales data from the 47 largest metros, found that homebuyers cancelled 53,000 home-purchase agreements in September. That’s equal to 15 percent of homes that went under contract that month, and 13.6 percent higher than the previous year.
Buyers in Texas and Florida were most likely to “ghost” homesellers, Redfin said, with Tampa (20.1 percent), Atlanta (19 percent), San Antonio (19 percent), Orlando (18.7 percent), and Fort Worth (18.7 percent) leading the way in home-purchase agreement cancellations. The share of cancellations was up by double-digit percentages in the top 10 metros, with Tampa experiencing the most significant bump (+17.7 percent).
The market factors possessing buyers’ decision-making vary, the report said.
Some buyers are walking away from contracts due to failed negotiations over pricing, repairs, and other concessions. Meanwhile, others are experiencing jitters due to the broader economic climate, as concerning reports on jobs and the cost of living cast doubt on their ability to purchase — and keep — a home.
“I’m seeing a lot of buyer’s remorse,” Missouri-based Redfin Premier agent Jo Chavez said in the report. “Buyers make an offer, then they start worrying they could have found a better deal or a better home because there are more homesellers than buyers in the market. Some other buyers are backing out because they’re concerned about job security.”
While sellers in markets throughout the Sun Belt and the South are struggling to keep deals on track, sellers on the coasts are faring much better.
San Francisco; Nassau County, New York (i.e., Long Island); and San Jose, California, had the lowest shares of contract cancellations in September, according to the report. Each of those markets had home-purchase agreement cancellation rates under 7 percent. Seattle, New York and Boston also had relatively low cancellations, hovering around 10 percent.
Redfin said cancellation rates will improve once buyers, sellers and their agents adjust their strategies based on the current market.
“In a market where home prices and mortgage rates are high and competition is low, buyers want the home they buy to be perfect,” the report read. “Sellers, for their part, want to get the price they have in mind and avoid losing money on the deal. Some sellers who bought during the pandemic may also need to sell their home for a certain price to avoid taking a loss, and are unwilling to negotiate.”
“In many cases in today’s buyer’s market, homesellers are the ones fighting for a buyer; they should prepare to be flexible and willing to negotiate,” it continued.
“Homebuyers are in the driver’s seat in much of the U.S. Often, they’re able to negotiate the price and ask for concessions. However, there are ways to guard against deals falling through and speed up the closing process, [such as] getting pre-approved and using contingencies wisely.”