Sellers who priced homes at 'aspirational levels' are cutting asking amounts at a record pace — here's how a buyer can get the best possible deal

For Americans looking to buy a home, this past month brought some good news: listing prices are falling, signaling that sellers may be in a less stubborn mood compared to a year ago.

According to an analysis by Realtor.com (1), the national median asking price fell in June to $430,000, a drop of 2.5% compared to one year ago when it sat at $440,950. That makes June the eighth consecutive month that listing prices have decreased, according to the platform, and it marks the biggest year-over-year drop since Realtor.com began tracking prices in 2017.

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Danielle Hale, Realtor.com’s chief economist, says the data points to a “functioning market.”

“Sellers are reading market conditions and are pricing accordingly from the start rather than listing high and cutting later, and buyers are taking note and making bids,” Hale says in the report.

Uneven picture across the country

While the median national listing price is down, it’s not the case for the whole country.

According to Realtor.com, while year-over-year listing prices fell in June in the West (-4.0%), the South (-2.5%) and the Northeast (-1.0%), the Midwest stayed flat compared to a year ago (0.0%), although it did see a -1.2% dip in May (2).

Some sellers may still be living in the past when it comes to listing prices, however. Marcy Roth, an agent at Douglas Elliman in Beverly Hills, Calif., told Realtor.com (1) that, for high-end properties, she is “consistently seeing sellers price at aspirational levels.”

“We are watching these properties go through multiple price adjustments and agents until finding a real buyer,” Roth said. “Many sellers have been trying to sell for years, until they come to understand where the market is at.”

The drop in listing prices comes as Americans are feeling priced out when it comes to entering the market. More than 65% of households in 39 states and the District of Columbia said that they were unable to afford a median-priced new home, according to an analysis by the National Association of Home Builders (3) from February this year.

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Help for homebuyers

If you are looking to make the leap to homeownership, experts say the drop in listing prices is only one aspect of the affordability puzzle.

“Reduced asking prices don’t necessarily mean anything if you can’t afford the total cost of homeownership, which includes all expenses related to the mortgage, insurance, taxes, HOA fees, maintenance costs and savings,” Alexei Morgado, a licensed real estate agent, told Forbes (4).

One expense you can take a closer look at when buying a home is the origination fee, which is charged by mortgage lenders to cover processing costs.

According to Consumer Reports (5), most lenders charge origination fees between 0.5% and 1% of the loan amount, which covers services including documenting and processing the loan, verifying financial information, time spent in meetings and underwriting.

If your lender offers mortgage points — prepaid interest on a mortgage that lowers your interest rate — they may also be included in the origination fee. One point generally costs 1% of the loan amount, which equals a 0.25% reduction in your interest rate, Consumer Reports says.

Some lenders offer loans with no origination fees, but Consumer Reports advises that “sidestepping an origination fee may end up costing you more in the long run.”

Jay Sobo, founder and CEO of Liberty Financing, told Consumer Reports that even if a lender advertises that they don’t charge an origination fee, “these fees can also be baked into the rate and cost of the loan.”

“This may avoid paying origination fees upfront but could increase the total cost over the life of the loan,” Sobo told Consumer Reports. “While mortgage brokers are limited to 2.75% in total fees charged as origination, lenders are permitted to collect well over 3% built into the backend of the loan.”

Consumer Reports adds that while upfront origination fees can be avoided by using lender credit, “which is essentially a negative mortgage point,” you’ll end up paying a higher interest rate, which could cost more over the life of the loan.

“Even if you’re not using lender credits, the same fundamental tactic may be used by lenders that technically don’t charge origination fees,” Consumer Reports warns.

Another option is to negotiate that the seller pays your closing costs. This tactic to entice buyers to close the deal might only happen in a slower market, or if a home has been sitting on the market for a long time.

With the average 30-year fixed mortgage rate still sitting above 6% (6), even with the drop in average listing prices, buyers are likely still looking to trim their costs, and saving on origination fees could help in the struggle around affordability.

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

Realtor.com (1), (2); National Association of Home Builders (3); Forbes (4); Consumer Affairs (5); Federal Reserve Economic Data (6)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.