Market Journal: working through the Frozen Middle in May 2023

We are sitting in the middle of a historic standoff in the housing market on this May day in 2023. Buyers are staring at interest rates that feel painfully high compared to last year, while existing homeowners refuse to sell because they do not want to give up their three percent mortgages. This frozen middle has choked off listing inventory, but it has also created a unique window of opportunity for buyers who are willing to look past the headlines.

Because transaction volume is so low, the sellers who actually list their homes right now are highly motivated. Instead of fighting multiple offers and waiving every protection, you can actually negotiate. Smart buyers are skipping price cuts and instead asking sellers to fund temporary rate buydowns and home repairs, setting themselves up for a future transition when rates eventually settle.

The Tri-Cities Reality: Handling the Pasco Market

The market dynamics play out in very specific ways here in the Columbia Basin. In places like Pasco and the wider Tri-Cities area, we have a mix of rapidly expanding new construction developments and established agricultural properties. Unlike the dense Puget Sound markets, the Tri-Cities housing market relies heavily on steady job growth from the laboratory, food processing, and agricultural sectors. When the market freezes, builders who have inventory sitting on the books get nervous much faster than individual homeowners.

This means if you are looking at properties around Franklin County, you have bargaining power that did not exist eighteen months ago. Buyers can find homes that have been sitting on the market for weeks, which was unheard of during the buying frenzy. These sitting properties are prime targets for negotiation, especially when dealing with builders who need to clear their inventory before their construction loan interest eats up their entire profit margin.

Structuring a Seller-Paid Rate Buydown

Instead of asking a seller for a ten thousand dollar price reduction, which only lowers your monthly payment by a tiny amount, you should ask for a seller credit to fund a temporary rate buydown. A temporary buydown, like a 2-1 buydown, reduces your effective interest rate by two percent in the first year and one percent in the second year. To see how these initial lower payments affect your household budget, you can estimate your home purchase affordability by adjusting the interest rate input down by one or two percent on the tool.

This strategy keeps your initial monthly housing costs manageable while you wait for the market to shift. The money for the buydown sits in an escrow account funded entirely by the seller credit. If rates drop during those first two years, you can execute a refinance to a new rate and term loan to lock in a permanent lower payment, and any remaining money in that buydown escrow account is applied directly to reduce your principal balance.

Negotiation Strategies in a Frozen Market

You have more bargaining power today than at any point in the last three years, but you have to use it correctly. You should not just write lowball offers that offend sellers and shut down the conversation. Instead, focus on structuring offers that solve the seller's need to close while protecting your cash reserves and monthly payment.

Here is a checklist of the key concessions you should negotiate before signing your final contract:

• Request a seller credit to cover your recurring and non-recurring closing costs.
• Demand a full professional home inspection and refuse to waive the right to negotiate repairs.
• Structure a temporary rate buydown funded entirely by the seller to ease your first year of payments.
• Ask the seller to pay for a comprehensive home warranty to cover older appliances and HVAC systems.
• Negotiate for direct seller repairs on major structural or safety issues discovered during the inspection.

How Concessions Affect Your Financing

When you negotiate seller credits, you have to stay within the strict guidelines set by the loan programs. For conventional loans, the maximum seller concession is capped at a percentage of the purchase price, which depends on your down payment amount. Keeping up with these shifting financing limits and regional market shifts is why I maintain our archive of Washington real estate market updates so buyers can see how rules apply to real transactions.

If you negotiate a credit that exceeds the allowable limit for your specific loan program, that excess money cannot go back to you as cash. It simply disappears or must be used to reduce the sales price. This is why your agent and your loan officer must coordinate closely before you submit an offer, ensuring every dollar of negotiated seller credit is fully applied to reduce your cash out of pocket or buy down your interest rate.

Questions I get about this

**Question:** Can I use a seller credit to permanently buy down my interest rate instead of a temporary buydown?

**Answer:** Yes, you can use seller concession money to purchase permanent discount points. This permanently lowers your rate for the entire thirty-year term, which makes sense if you plan to keep the loan for a very long time. However, in a high-rate market where we expect rates to drop eventually, a temporary buydown is often better because it gives you much larger payment relief upfront, and the unused escrow funds help pay down your principal when you refinance later.

**Question:** What happens if the home inspection reveals major issues but the seller refuses to do repairs?

**Answer:** If the seller refuses to handle physical repairs, you can negotiate for an equivalent dollar credit at closing, provided it fits within the lender's concession limits. This allows you to control the quality of the work by hiring your own contractors after closing, rather than relying on a departing seller to do the cheapest possible repair job just to get the deal done.

Dom's take, written May 3, 2023

I just hung up with a borrower in Franklin County who was terrified because their monthly payment calculation on a standard thirty-year fixed loan came back hundreds of dollars higher than they planned. Grinding is the only word for this market right now. Nobody wants to give up the three percent loan they currently have, inventory is incredibly thin, and every single deal takes massive creative effort to put together. The silver lining is that the sellers who actually have to move today are finally paying attention to what a buyer needs to make the numbers work.

We structured a 2-1 buydown for that client, funded by a ten thousand dollar seller concession on a home in Pasco that had been sitting for forty-five days. That seller would have laughed at this offer last year, but today they signed it because they needed the exit. If you are sitting on the sidelines waiting for rates to magically drop back to pandemic lows, you are missing the best window we have seen in years to make sellers pay for your rate reduction and your repairs.

What I'd say now (August 2026)

I was right about that market phase, and the clients who listened to me in 2023 saved themselves thousands of dollars. In the months that followed, we saw a very slow, uneven thaw across Washington counties. Rates eased off their peak in fits and starts, and buyers who grabbed those properties with temporary buydowns were able to transition smoothly when the market began to normalize. They got the homes at yesterday's prices with the seller paying for their initial lower payments, while the buyers who waited ended up competing again as inventory remained tight.

Today in August 2026, buyer power has firmly returned, and concessions have become a standard part of doing business rather than an emergency measure. Days on market have stretched out, and the transaction is once again about real negotiation, physical inspection periods, and choosing the right mortgage structure rather than just offering the highest price. If you bought in the frozen middle of 2023 and used a temporary buydown, you negotiated from a position of strength that set you up perfectly for the stabilizing market we are operating in today.

Talk it through with me

If you want to see how these negotiation strategies can work for your own purchase, contact me to map out your home finance strategy. I can get you pre-approved in about five minutes and we average a clear-to-close in fifteen days or less, helping you write competitive offers that get accepted.