20 metro areas with the highest share of home-price cuts in October, some in the $200,000s — plus 6 aggressive bargains buyers can ask for, according to 2 real-estate experts

• In October, Indianapolis and Denver were among the cities where sellers aggressively reduced prices.
• According to Shmuel Shayowitz, buyers can have an aggressive negotiating advantage.
• According to Dottie Herman of Douglas Elliman, there must be a compromise between sellers and buyers.

The home-buying frenzy that dominated the majority of 2020 and 2021 is over. Bidding wars have cooled, and sellers are lowering their prices in some areas.

If you’re looking to buy in those markets, this is great news, especially since mortgage rates are more than double what they were three years ago.

Buyers gain significant negotiating power, which, if done correctly, can help offset some of the higher mortgage rates.

But first, it’s critical to understand where buyers have the upper hand. The following is a list of the 20 metro areas with the highest proportion of home sellers lowering their listing prices in October. The data is based on the US Census Bureau’s top 50 most populated areas. Redfin’s home-price data is based on information from local multiple listing services.

Metropolitan areaThe average selling priceIn October 2023, what percentage of homes’ prices will have dropped?$275,555 in Cincinnati, OH.$290,00051 in Indianapolis, IN.Denver, CO$575,00046.Tampa, FL$370,00042 (52%).Portland, OR$535,00042 (80%).San Antonio, TX$310,00041 (62%).$444,00040Austin, TX.Dallas, TX$420,00039 (71%).85%$365,00038Minneapolis, MN.Fort Worth, Texas$350,00038.$360,00037 in Jacksonville, Florida.St. Louis, Missouri$245,00037.Sacramento, CA$578,00037 (14%).Seattle, WA$773,47537.$362,00035 in Baltimore, MD.Cleveland, OH$210,00035 (85%).Orlando, FL$399,99035.Houston, TX$329,70035 (51%).Phoenix, AZ$450,00035.Kansas City, Missouri$315,00034.88%

How to get a good bargain

According to Shmuel Shayowitz, president of Approved Funding, a non-depository mortgage bank founded in 1987, it’s no longer about making a strong offer or being willing to bid up. It’s a different market than it was a few years ago.

“It’s just a matter of going in there and trying to be as aggressive as possible in low-balling the offer,” he said.

A lower price may offset the cost of higher interest rates and reduce your monthly payments. He told Business Insider that he has helped some homebuyers navigate the process of submitting lower offers based on the level of competition in each market.

To be more specific, you want to stay ahead of the decline curve. So, if the market has dropped by 5%, you could make an offer that is less than 7% or 8% of the asking price, he explained.

According to Dottie Herman, vice chair emerita of real-estate brokerage firm Douglas Elliman, if you’re in a buyer’s market and a property is well-priced, you can offer 15-17% less than the asking price. She mentioned that in exchange, you can make favorable concessions. And if a property has been on the market for more than three months, the likelihood that they will negotiate increases.

Herman stresses the importance of doing your research before making an offer to see what comparable properties are selling for.

“You’re better off having the ammunition on hand so you know what’s out there.” “You can then justify why you’re making a lower offer,” Herman explained.

Everything is a compromise, and how you negotiate is critical, according to Herman. Knowing why the seller needs to sell the property is beneficial. If they need to move by a certain date or need the money right away, you can offer a quick closing. If, on the other hand, they are looking for another property and may require more time, you can offer flexible closing terms or even an occupancy agreement in which the seller rents the unit for a set period of time.

Buyers can get more than just price reductions. According to Redfin, more than one-third — or 35% — of home sales in the three months ending October 31 included buyer concessions. This was an increase from 27.6% two years ago.

Offering to pay closing costs could be a form of concession. This can be a significant benefit, particularly in states with high fees. The average national closing cost with taxes in 2021 was $6,905, but in places like Washington, DC, it’s closer to $30,000.

Buyers can also request that the seller pay for things like mortgage-rate buydowns (paying for points to lower the interest rate), home inspection fees, attorney fees, and cash for repairs.