More buyers are asking for — and getting — concessions from sellers

Dig the house but hate the carpet? Or maybe the 6%-plus mortgage rate is too steep?

Well, ask the home seller to help. Everybody is doing it.

OK, not everybody but more than two of every five (42%) home sellers nationwide made concessions to help homebuyers during the fourth quarter, compared to 31% a year ago, according to Redfin. That’s the largest percentage of concessions by home sellers since July 2020, when the housing market was reeling from the first few months of the COVID pandemic.

Homeowners giving homebuyers a helping hand before shaking on a deal has been a part of the home-selling experience for decades. But homebuyers are gaining the upper hand in a challenging market, arguably the most difficult in the past dozen years or so.

And they are taking full advantage, as homes remain on the market for several weeks and, in many cases, more than three months, according to the latest data.

LET’S MAKE A DEAL

Concessions can be an allowance for outdated, worn-out carpets to paying points for buyers to get a more affordable mortgage rate and monthly payment. Cleverness and creativity can help with concessions for a new backyard or high-end garage doors.

California, one of the hardest-hit housing markets in the nation, has become concession central. 

Almost three of every four (73%) homes sold in San Diego included concessions during the fourth quarter, compared to 52% a year ago – easily the highest in the nation.

At least half of home sellers in Los Angeles (53%) and Sacramento (55%) offered concessions to close deals – and open doors. 

But don’t look for deals in San Jose. Fewer than one in seven homeowners in San Jose is willing to help buyers, the second-lowest rate in the nation behind New York City.

One-time mortgage leader Wells Fargo scales back on home loans

Wells Fargo Bank, once the nation’s leading mortgage lender, is largely pulling out of the home-loan business.

The San Francisco-based bank announced the decision Jan. 10, and will only handle home loans for existing customers and minority borrowers, such as those who live in Black- and Latino-majority neighborhoods.

It’s an about-face for Wells Fargo, which has been a longtime leader in the mortgage industry and works closely with outside intermediaries on behalf of the bank.

“Mortgage is an important relationship product, and our goal is to continue to be the primary mortgage lender to Wells Fargo bank customers as well as minority homebuyers,” says Kleber Santos, CEO of consumer lending for Wells Fargo. “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus. As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”

In order to better help underserved communities, Wells Fargo will expand its existing $150 million Special Purpose Credit Program to include purchase loans and invest another $100 million to advance racial equity in homeownership, including partnering with nonprofit organizations and community-focused efforts. The bank will also add home mortgage consultants in minority communities.

A RECENT HISTORY OF HEFTY FINES

After several scandals and a record fine from the Consumer Financial Protection Bureau, Wells Fargo decided to focus on more traditional banking and wealth-management services.  

The bank’s face-account scandal, including in its mortgage business, has greatly affected its operations and reputation.

Last month, Wells Fargo reached a $3.7 billion deal with the CFPB after allegations that it hurt customers, including home-loan borrowers. The bank is accused of assessing fees and interest charges on auto and home loans.

In 2021, the Office of the Comptroller of the Currency, which regulates national banks, fined Wells Fargo $250 million for failing to help homeowners from losing their homes.

Fast-rising mortgage rates were the latest – and apparently last – challenge before the bank bowed from the home-loan industry. Mortgage rates have more than doubled during the past several months, causing many home-loan companies to lay off employees or even shut down.

Wells Fargo approved about $21.5 billion in home loans during the third quarter, a 60% drop from a year ago.

6 of the 10 happiest U.S. cities are in California

Don’t worry, be happy.

And many Californians are pretty darned happy living in the Golden State, according to a recently released report by SmartAsset. Despite the headlines of Californians hitting the road heading to Arizona, Idaho and Texas, many who remain here are rather happy.

California has six of the 10 happiest cities in the nation, with Sunnyvale in the top spot, thanks to high incomes – two of every three residents earn at least $100,000 – and one of the lowest crime rates. 

Fremont finished in fourth place with its high incomes, a relatively low cost of living and few residents below the poverty line. 

Big dollars and small expenses are often a happiness boost. Plus, homeowners with a ton of equity or without a mortgage also generate a lot of smiles. 

Roseville, San Jose, Santa Clarita (sometimes referred to as Valencia) and Irvine finished in seventh through 10th place on the just-for-fun list.

MARRIAGE EQUALS HAPPINESS (UH, OK)

SmartAsset crunches data for 13 metrics across three categories – personal finance, well-being and quality of life – to find the happiest places. Some data include annual income, bankruptcies, down payment to income for mortgages, health insurance coverage, marriage rates and violent crime rates.

It’s far from a perfect science, but it gives a glimpse into the cities and their residents.

So, California boasts some of the happiest cities in the nation, but it also has the lowest-scoring of the 164 cities with Sacramento. The capital city’s quality of life – such as the high percentage of people below the poverty level and the violent crime rate – is a downer.