The Housing Market Is a Game of Musical Chairs. Here’s How to Grab a Seat.

From The Mortgage 101 Podcast with Manley Haines and Anthony Valentino

The short answer: Buyers have more negotiating power than they’ve had in years. 21.1% of sellers cut their asking price in September, the most for that month in Redfin’s records. Buyers can ask sellers to pay closing costs, fund a 2-1 rate buydown, cover a home warranty, and include personal property, all within their loan program’s seller credit cap. That leverage won’t last. When rates fall, the buyers who have been waiting come back all at once.

Key Takeaways

• Buyers have leverage right now. Price cuts are up in every region of the country compared to a year ago, and there are 4.9 months of housing supply on the market.
• Prices aren’t crashing. The median existing home sold for $429,000 in August, the 38th straight month of year-over-year gains. List prices are negotiable. Values aren’t collapsing.
• Rates are climbing, not falling. The 30-year fixed hit 7.63% on October 7 (per Mortgage News Daily), and futures markets have the Fed’s rate higher in 2027 than today.
• Buyers should negotiate the whole deal, not just the price. Closing costs, a rate buydown, and a home warranty can all come from the seller.
• Sellers who want to move in the next five years should price for today and negotiate for now.

Why the Housing Market Feels Like Musical Chairs

Everybody’s still circling. Everybody thinks they’ve got time. But the chairs are already disappearing, and when the music stops, somebody’s getting left standing.

On the podcast, Manley and Anthony illustrate this with two hypothetical people.

Tom bought his home in 2021 at a 2.875% rate. His company is moving him to Phoenix within two years, so he listed this summer at the number his home value app showed him back in 2022. Every week the sign stays up, he tells himself the right buyer is coming.

Emily and Sam are first-time homebuyers who have been renting and saving for three years. They’ve driven past Tom’s house more times than they’ll admit. Every time they run the payment, they close the app and push it back. After the Fed meeting. After the holidays. After spring.

Neither of them is being reckless. On paper, waiting looks smart for both. But as Manley puts it, musical chairs doesn’t care how smart you are. It only cares where you’re standing when the music stops. Tom is holding on to a price the market already moved past. Emily and Sam are holding on to a rate the market already took away. They’re actually waiting on each other.

Which Chairs Are Already Gone?

For sellers

Chair #1: Waiting it out. About 5.6% of listings were pulled off the market in September, according to Realtor.com. Sellers aren’t retreating. They’re staying in and cutting.

Chair #2: The 2022 price. The median list price is $419,250, down 1.4% from a year ago. With 4.9 months of supply, up from 4.6, a buyer can walk out of Tom’s house and into three others the same afternoon. Every one of those homes is another seller fighting for the same buyer.

For buyers

Chair #1: The crash. Asking prices are dropping, but sold prices aren’t. The median existing home sold for $429,000 in August, up 1.6% year over year.

Chair #2: The cheap rate. At 7.63%, rates are less than half a point from 8%. On a $405,000 loan, going from 7.5% to 8% adds about $140 a month. That’s not a crash in your favor. That’s a raise in your payment.

The Fed may pause at its October 28 meeting, but markets still put the odds of another hike before year-end at roughly seven in ten. The DJ might take a break, but the song isn’t over. When the music starts again, there are fewer chairs.

What Buyers Can Ask Sellers For in This Market

In this market, buyers don’t just negotiate the price. They negotiate the whole deal.

A real example: $105,000 under asking plus $50,000 in credits

Anthony is working with a client in Florida on a home listed at $1.3 million. She wanted to open at $1 million. His advice: it’s a buyer’s market, but these sellers aren’t panic selling. You don’t have to meet in the middle, but you do have to do more than a baby step.

The $1 million offer was rejected, but the conversation didn’t stop. It moved to $1.1 million, then $1.15 million, and they’re now talking at $1.195 million. That’s $105,000 under asking. On top of that, she’s asking for $50,000 in seller concessions toward a 2-1 buydown, closing costs, and a home warranty. At the time of recording, the deal was still being negotiated and on track to be accepted.

Writing Emily and Sam’s offer: the four asks

Say Emily and Sam meet Tom at $450,000 with 10% down on a conventional loan ($405,000 loan amount).

Ask #1: Seller-paid closing costs. At roughly $12,000, that’s $12,000 less they bring to the closing table. Most buyers never ask, and that money stays with the seller.

Ask #2: A seller-paid 2-1 buydown. At 7.5%, this costs about $9,650. Their payment starts around $2,300 in year one, rises to about $2,560 in year two, and reaches the full $2,832 in year three. They still qualify at the full payment, so they aren’t stretching their budget. They’re planning for the worst and hoping for the best.

Ask #3: A home warranty. About $700 covers major systems and appliances for the first year.

Ask #4: Personal property. Tom has a custom outdoor kitchen and patio furniture he doesn’t want to haul to Phoenix. In this market, you can ask for that too.

Seller Credit Rules That Trip Buyers Up

Seller credits lower your cash to close, but they come with rules:

• They can’t be saved for repairs after you move in.
• They can’t be handed to you as cash.
• They can’t pay your down payment.
• Every loan program, including conventional, FHA, and VA, sets its own cap.

For Emily and Sam, putting 10% down on a conventional loan, the cap is 6%, or $27,000. Their closing costs, buydown, and warranty total about $22,000, which fits inside the limit. The barbecue and furniture are written into the contract at zero value, which keeps them out of the loan math. If credits go over the cap, the extra doesn’t come back to you, so the credits need to be sized to fit exactly. Get it in writing, and let your lender structure it.

How Sellers Can Still Win

Both sides move in a deal that closes. Tom has to be in Phoenix on a deadline, so a short rent-back lets him stay a few weeks after closing while he moves. Most lenders allow one as long as it’s not over 60 days. A fully underwritten approval tells Tom the deal will actually close.

Round three in one sentence: sellers offer more than a number, and buyers ask for the whole deal while the ship is still theirs. Ask for all of it, and let the seller tell you no. Not a perfect deal. A done deal.

Frequently Asked Questions

Is it a buyer’s market right now?
In many areas, yes. Price cuts are up in every region compared to a year ago, and supply sits at 4.9 months. Conditions vary by local market, so talk with a lender and agent about yours.

Should I wait for home prices to crash before buying?
The data doesn’t point to a crash. Sold prices have risen year over year for 38 straight months. List prices are negotiable, but values are holding.

Should I wait for mortgage rates to drop?
Rates are near 7.63%, and futures markets have the Fed’s rate higher in 2027 than today. When rates do fall, the buyers who have been waiting rush back in, and your negotiating leverage goes with them.

What is a 2-1 buydown?
A 2-1 buydown lowers your interest rate by 2% in year one and 1% in year two before the full rate kicks in in year three. When the seller pays for it, you get lower payments while you settle into the home.

How much can a seller contribute toward my closing costs?
It depends on your loan program and down payment. On a conventional loan with 10% down, the cap is 6% of the purchase price. FHA and VA set their own limits.

Can seller credits be used for my down payment?
No. Seller credits can’t pay your down payment, can’t be given to you as cash, and can’t be saved for repairs after closing.

What should sellers do in this market?
If you plan to move within the next five years, price for today and negotiate for now. Offering credits, a rent-back, or flexibility can get you to the closing table. If you won’t, the honest answer is to stay put for the long haul.

Find Your Chair

The chairs are being pulled right now, and most people won’t notice until the music stops. Sellers, come in with your credits ready, not just your price. Buyers, you’re running the ship until rates come down and the crowd comes back.

Bring us the house you keep driving past, and we’ll show you what it really costs.

🎧 Listen to more episodes of The Mortgage 101 Podcast at themortgage101podcast.com.

This article is for educational purposes only and is not financial advice. Loan limits, credit caps, and program guidelines vary. Talk with a licensed mortgage professional about your situation.