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Price drops and incentives are mounting across the Dallas region.

Dallas Homebuyers May Have More Leverage Than They've Had in Years

For much of the housing boom, Dallas-area buyers often had very little negotiating power.

Homes could receive multiple offers. Buyers sometimes had to move quickly. Sellers had little reason to pay closing costs or make major concessions because another buyer might be waiting behind the first one.

A motivated seller market changes that dynamic.

According to the Parcl Labs data, more than half of Dallas-area listings had already undergone a price reduction in the recent snapshot.

That doesn't mean every seller will accept a below-asking offer, and it certainly doesn't mean every home in DFW is suddenly a bargain.

What it does mean is that buyers should be paying closer attention to properties where sellers may have a reason to negotiate.

A home that has been sitting on the market, received multiple price reductions or is competing against several similar homes nearby may give a buyer considerably more leverage than the asking price alone suggests.

The Opportunity Could Be Even Bigger With New Construction

This trend is particularly interesting for buyers considering new construction homes in North Texas.

Homebuilders account for an unusually large share of housing inventory in Texas. Parcl Labs co-founder Jason Lewris has said builders represented nearly 30% of homes for sale statewide, with builder inventory even more concentrated in markets including Dallas-Fort Worth, Austin and San Antonio.

Parcl has also separately tracked motivated sellers specifically among new-home builders. In a recent new-construction snapshot, Dallas posted a 6.54 Motivated Seller Index, placing it among the most motivated new-construction markets in the country.

Parcl's research has highlighted major Texas builders including Lennar, KB Home and Pulte as companies that have been reducing asking prices on some inventory as builders attempt to move available homes.

For buyers, that creates a potentially unusual opportunity.

Builders don't always want to simply slash the advertised price of every home in a community. Instead, they may have other ways to make a deal more attractive.

Depending on the builder, community, home and financing situation, buyers may encounter incentives such as:

• Mortgage interest-rate buydowns
• Contributions toward closing costs
• Reduced prices on completed or quick-move-in homes
• Design-center or upgrade credits
• Appliance packages
• Reduced or waived lot premiums
• Temporary promotional financing
• Additional incentives for using a builder's preferred lender

Not every incentive can be combined, and offers can change quickly. That's why comparing the total purchase package can be more important than simply comparing advertised home prices.

A Rate Buydown Could Matter More Than Another Price Cut

This is particularly important for first-time homebuyers.

A lower purchase price is great, but the monthly mortgage payment is usually what determines whether a home comfortably fits into someone's budget.

That means a builder willing to contribute toward a permanent or temporary mortgage-rate buydown could potentially be more valuable to some buyers than another reduction in the home's sticker price.

Closing-cost assistance can also be extremely valuable for buyers who qualify for a mortgage but don't want to drain their savings account to get into the home.

The right deal will depend on the buyer.

For one person, getting the lowest possible sale price may make the most sense. For another, lowering the mortgage rate or reducing the amount of cash needed at closing may be far more useful.

This is one reason working with a real estate agent who regularly represents new-construction buyers can matter. The builder's salesperson represents the builder. A buyer's agent can help evaluate the complete offer and negotiate based on the buyer's interests.

Look Beyond Dallas Proper

Another advantage for DFW buyers is the sheer number of communities where new homes are being built.

Some of the strongest opportunities may not be inside Dallas itself.

North Texas continues to have significant new-home development in fast-growing communities surrounding the urban core.

Buyers looking north might compare new construction and available inventory in Celina.

Nearby communities such as Frisco, Prosper, Melissa, Anna and McKinney can also give buyers different combinations of commute, home size, neighborhood amenities and builder inventory.

East of Dallas, buyers may want to investigate new-home communities in Royse City, Forney, Rockwall, Lavon and surrounding areas.

South of Dallas, communities including Midlothian, Waxahachie, Red Oak, and Mansfield have also experienced substantial residential growth. That growth though is slowing and builders are responding with major price drops and incentives. One 5 bedroom newly constructed home in Midlothian just had a price drop of over $100,000 and the builder upped incentives to include a large amount of cash for closing and brand new appliances.

The important thing is not to assume the deal available in one city or community is the same deal being offered 20 or 30 miles away.

One builder may be selling homes quickly in one neighborhood while carrying several completed homes in another. Incentives can vary by builder, community, floor plan and even individual home.

First-Time Buyers Shouldn't Assume They're Still Priced Out

Perhaps the biggest takeaway from the Parcl Labs data is that people who gave up on buying a home during the frenzy of the past several years may want to take another look.

A softer market doesn't automatically make every home affordable.

But when sellers are cutting prices, builders have inventory to move and incentives are available, the numbers can look very different than they did when buyers had little negotiating power.

That can be especially important for buyers who have been renting because they believed their credit wasn't good enough or they didn't have enough money saved.

At Home Marketing Services, we work with first-time homebuyers throughout Dallas-Fort Worth, including buyers who may need help understanding their credit and financing options before they're ready to purchase.

We also work with new-home builders throughout the area and help buyers compare not only home prices, but the incentives and financing packages that may be available.

Sometimes the best deal isn't the house with the biggest advertised price reduction.

It may be the home where the builder can help lower your interest rate, contribute toward closing costs or structure a purchase package that makes homeownership fit your budget.

This May Be the Time to Start Shopping Again

Nobody can predict exactly where Dallas-area home prices or mortgage rates will go next.

Parcl Labs is also clear that its Motivated Seller Index measures current seller behavior, not a forecast of future home prices.

But the current behavior is difficult to ignore.

Sellers are cutting prices. Builders are competing for buyers. Inventory is available. And Dallas has emerged as one of the most motivated major housing markets in America.

For prospective buyers, that doesn't necessarily mean rushing out and purchasing the first discounted house you find.

It means you may finally have room to negotiate again.

If you've been thinking about buying your first home, have concerns about your credit, or want to see what incentives Dallas-area homebuilders are currently offering, contact Home Marketing Services. We can help you understand where you stand, compare new and existing homes throughout DFW, and find the purchase package that makes the most sense for you.