July 12, 2023: Concessions and Creativity in the Frozen Spokane Market

This entry from my market updates hub covers the reality of the July 2023 market. We are in the middle of a frozen housing market where owners with low pandemic-era interest rates refuse to list their properties, creating a massive shortage of homes for sale.

For the buyers who are out shopping, the playbook has changed. Instead of fighting bidding wars, you are now negotiating for seller-paid closing costs, temporary rate buydowns, and repair credits on properties that have been sitting on the market.

The Reality of the Frozen Middle

When interest rates spiked, they created a golden handcuff effect. Homeowners who locked in historic lows are staying put because moving means doubling their interest rate. This has caused transaction volume to plunge across Washington, leaving only highly motivated sellers in the market.

Sellers who must list their homes today due to job changes, divorces, or major life shifts can no longer expect buyers to waive every inspection. They have to play ball, which opens a window of opportunity to negotiate financing terms that make your monthly payment more manageable.

Local Conditions in Cheney and Spokane

Looking closely at Cheney WA homes, the market has its own set of rules. As a university town with a strong agricultural presence, the property mix ranges from student rentals to rural acreage. When you look at properties further out in Spokane County, you frequently deal with private wells, older septic systems, and gravel road maintenance agreements.

Underwriting a rural property means checking these items early in the process. Sellers are finding that if their well fails a flow test or the septic tank needs decommissioning, they cannot simply wait for a cash buyer who does not care. They have to pay for the repairs or offer a credit, which gives you room to structure a cleaner deal.

Structuring Buydowns and Repair Credits

To see how these credits affect your budget, you can use my affordability calculator and change the interest rate input to see the difference between a standard rate and a temporary buydown. A seller credit can be used to set up a temporary buydown, where your rate is lower in the first year and the second year.

This structure gives you immediate relief on your monthly cash flow while you wait for inflation to cool. When negotiating these concessions, there are specific steps you and your real estate agent must take to make sure the lender accepts them:

• Get the seller credit written as a lump sum for closing costs, rather than earmarking it for specific repairs that lenders might require to be completed before closing.
• Confirm the maximum seller concession limit for your specific loan program, which is typically capped based on your down payment.
• Verify that the home appraisal does not note safety hazards that must be fixed by a licensed contractor before the loan can be funded.
• Ensure your agent uses the correct addendum language to prevent any unused credit from being forfeited at the closing table.

Using Reverse Mortgages in a High-Rate Market

For older buyers, high interest rates do not have to dictate your monthly budget. A Home Equity Conversion Mortgage, which is the official term for federally insured reverse mortgages, allows senior buyers to purchase a primary residence without a mandatory monthly mortgage payment. You still have to pay your property taxes, homeowners insurance, and maintain the property, but the cash flow strain of a traditional loan disappears.

In a slower market, you can combine this strategy with a seller concession to cover your upfront mortgage insurance premium or closing costs. This lets you preserve your retirement assets, keep your cash in the bank, and secure a home in Spokane County without worrying about how high rates will affect your monthly fixed income.

Questions I get about this

Can I use a seller credit to pay for my entire down payment?

No, industry guidelines prevent seller credits from being used toward your minimum down payment requirement. Concessions can only cover closing costs, prepaids, escrow setup, and interest rate buydown fees, so you still need to bring your own funds for the required down payment.

What happens if the home appraisal comes in lower than the purchase price during a slow market?

You have options. You can ask the seller to drop the price to match the appraised value, pay the difference in cash, or walk away if you have an appraisal contingency. In this market, most sellers prefer to lower the price rather than let the transaction fall apart and have to list their home again.

Dom's take, written July 12, 2023

Deciding whether to buy a home with a temporary rate buydown or wait for rates to drop is a tough coaching conversation to have at my desk today. Grinding is the only word for it. Nobody wanted to give up the loan they had, inventory was thin, and every deal took creativity. The upside was that sellers who truly had to move started paying attention to what a buyer needed.

We are spending hours looking at rate sheets and calculating break-even points on seller-paid points versus price drops. It is stressful for buyers, but the people who are willing to negotiate hard on repairs and credits right now are getting terms that would have been laughed at during the refinancing boom. Deciding to step into this market means looking past the sticker shock of the interest rate and focusing entirely on the structural concessions you can extract from the seller today.

What I'd say now (August 2026)

I was right about the value of negotiating those structural concessions instead of waiting for a massive drop in home prices. Buyers who sat on the sidelines waiting for rates to plunge missed a window where sellers were actually willing to pay for closing costs and rate buydowns. As inventory slowly thawed in some parts of Washington, those who learned how to negotiate repair credits and financing terms came out far ahead of those who just focused on the list price.

The slow return of buyer leverage eventually became the standard way of doing business as we saw inventory build and days on market stretch out. We transitioned into a much more balanced, normal market where inspections and seller contributions are normal parts of the transaction rather than exceptional favors. If I were sitting down with you today, I would tell you that the financing structure, the program choice, and the seller concessions still drive your actual monthly payment much more than trying to time the bottom of the market.

Talk it through with me

Whether you are looking at a home in Spokane County or exploring options across Washington, let me help you analyze the numbers. Please reach out to me directly so we can run a quick five-minute pre-approval, look at your specific scenario, and put together a strategy to close your loan in fifteen days or less.