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  • What Is a Manufactured Home? A Fresh Look On Prefab Housing

    With interest rates shifting and the price of houses for sale often feeling out of reach, many buyers are searching for creative avenues into home ownership. One option that’s getting renewed attention? Manufactured housing.

    Whether you’re looking to buy an affordable house in Los Angeles or on the opposite coast in Charleston, SC, the flimsy mobile home stereotype of the past is fading fast. Today’s manufactured homes are engineered in high-tech facilities, designed for energy efficiency, and offer a path to homeownership that is both functional and affordable. 

    From the HUD code to the way you’ll finance your purchase, here is everything you need to know about today’s manufactured homes.

    In this article:
    What is a manufactured home?
    Manufactured home vs mobile home
    Manufactured home vs modular home
    The build process
    Manufactured home cost
    Where you can put mobile homes
    Financing a manufactured or mobile home
    Manufactured home long-term value
    Mobile home pros and cons
    Is a manufactured home right for you?

    What is a manufactured home?

    A manufactured home is a prefabricated house built using standardized parts in a controlled factory environment, then transported to its final destination. In contrast, traditional homes are built on-site on a permanent foundation, with materials delivered to the property.

    Manufactured homes are built on a steel chassis, which allows them to be moved by trailer. Once they arrive at their site, they are “set,” meaning they are anchored to the ground—either on a permanent foundation or using concrete blocks, piers, or tie-downs. While they can technically be moved again, the majority of manufactured homes never leave their first location. However, the ability to transport the home often means manufactured housing is considered a vehicle, and must comply with related tax and zoning laws.

    The HUD code

    By law, a manufactured home is defined as a dwelling built after June 15, 1976, and regulated by the Federal Manufactured Home Construction and Safety Standards, more commonly known as the HUD code. Unlike stick-built homes, which follow local or state building codes that vary based on location, every manufactured home in the U.S. follows the same federal standard.

    This code dictates everything from the strength of the roof to the efficiency of the insulation and the safety of the electrical system. Like site-built homes, manufactured housing utilizes familiar building materials like drywall and lumber, and buyers can often choose from a range of layouts, finishes, and upgrades.

    Manufactured homes vs. mobile homes

    You’ll still hear people use “manufactured home” and “mobile home” interchangeably, because in a lot of ways, they’re the same thing: standardized, factory-built homes that are “mobile,” or transported to their final site. The main differences between the two lies in the build date and quality.

    • Mobile homes: Constructed before June 15, 1976. These were built before the HUD Code existed. They often had lower safety and quality standards and are much harder to finance or insure today, but are often re-sold in parks at an approachable price point.
    • Manufactured homes: Constructed after June 15, 1976. These are the modern, safe, and regulated versions we see today. The build quality is usually more solid and sophisticated, can be larger in size, and might even be affixed to a permanent foundation.

    Why the distinction matters: If you are shopping for a manufactured home, checking the build date is key. Most lenders will only provide financing for prefab housing built after the 1976 cutoff—and some require the build to be even more recent, if they’ll finance the purchase at all. If you buy a pre-1976 mobile home, you’re likely looking at a cash-only purchase.

    Manufactured homes vs. modular homes

    On the other end of prefab homes is the modular house, which is sometimes confused with manufactured housing. While both manufactured and modular homes start off in a factory, that’s about where their similarities end. 

    Modular homes are more like customizable flat-pack furniture—most of the home is built in finely tuned, fittable parts in a factory setting, then transported to the build site for the final assembly. Unlike a lot of manufactured homes, modular homes are removed from the trailer and then built on permanent foundations, maybe even with a basement or crawl space. They also need to follow local building laws and regulations—meaning they are treated like a traditional home by banks and insurance companies from day one.

    The ability to prep the home site while the structure is factory-assembled means modular homes are quicker to build and are less expensive than traditional homes (with a base price of about $50–$100 per square foot), but in the end still require more labor, materials, and permitting than manufactured housing.

    How manufactured homes are built

    Manufactured homes are built in a controlled factory environment rather than on a traditional construction site. This approach allows builders to streamline production, limit weather-related delays, and maintain consistent quality throughout the build process.

    1. Indoor construction: The entire home is built indoors. This means lumber stays dry, the drywall never sees a drop of rain, and adhesives are in prime conditions to cure, reducing the risk of warped materials.
    2. Efficiency: Because factories build manufactured homes in bulk using standardized plans, they can order materials at a discount and use them with extreme efficiency, passing those savings down to the buyer.
    3. Built-in inspections: In a factory, inspectors are present at every stage of the assembly line. Every joint, wire, and pipe is checked before a section of the home is sealed up and ready for transport.
    4. Delivery to site: Once the structure is complete, it’s transferred via single, double, or even triple-wide trailers to its location to be installed, or “set.” This involves connecting any sections, hooking up utilities, and securing the unit in place via the chassis before the final walkthrough.

    How much do manufactured homes cost?

    The median price of a home in the U.S. currently sits at almost $430,000, according to Redfin data. Manufactured homes are significantly more affordable by comparison, with U.S. Census Bureau data showing average prices around $83,000 for a single-wide and $158,000 for a double-wide, not including upgrades.

    While the home itself is more affordable, don’t forget to budget for:

    • Land or site fee: Where you place your home will be, so have the site sorted ahead of time.
    • Site preparation: Clearing trees, leveling the ground, pouring a concrete pad, and maybe even preparing a permanent foundation.
    • Utility hookups: Connecting to water, septic, and electricity.
    • Delivery fees: Depending on the build company and distance from the factory.
    • Customization and finishes: Whether you opt for base-model options or higher-end materials and finishes can greatly affect your final total.

    Where can manufactured homes be placed?

    While manufactured homes can be a more affordable housing option, where the home is placed can play a big role in the overall cost. 

    1. Private land

    You buy a plot of land and place your home on it. This is often the gold standard for long-term value. When the home is permanently attached to a foundation on land you own, it is more likely to be taxed as “real property”—the same as a traditional house. This makes it easier to sell later and allows it to appreciate in value. However, land costs, local zoning, site and utility prep, and property access need to be taken into consideration before a manufactured home is purchased. 

    2. Manufactured home communities (parks)

    In this scenario, you own the home but (usually) lease the land from a community owner. You’ll pay a “lot rent” every month, which usually covers things like water, trash, and community maintenance.

    • The upside: It’s a lower barrier to entry. You don’t have to spend thousands on property or prepping the land, and the setup is simple.
    • The downside: You don’t own the land, even if you own the home. If the park owner raises the rent, your monthly costs go up—and there might not be a rent cap.

    Can you finance a manufactured home?

    Options for financing a manufactured home depend on how the home is installed, titled, and whether the land is owned or leased.

    1. Construction-to-permanent loans
    If you’re buying a brand-new manufactured home and already own—or are purchasing—land, a construction-to-permanent loan (often called a “one-time close” loan) can bundle the entire process into a single mortgage.

    With this loan, one financing package covers the land purchase, site preparation (such as clearing, grading, or septic installation), the home itself, and final installation. During the construction phase, buyers typically make interest-only payments, which helps keep monthly costs lower until the home is complete. Once the home is installed and passes final inspection, the loan automatically converts into a standard 15- or 30-year mortgage.

    To qualify, the home must be new and purchased directly from the manufacturer, placed on a permanent foundation, removed from the chassis, and meet HUD standards as well as local building requirements. The home must also be legally classified as real property.

    2. Conventional and government loans
    Some manufactured homes can still qualify for traditional mortgage financing if they meet certain requirements:

    • The home was built after June 15, 1976 and complies with the HUD Code.
    • The home is permanently fixed to a foundation that meets local and lender standards.
    • The borrower is also buying the land the home sits on.
    • The home is titled as real property, not personal property.
    • The home is at least double-wide in size and will be a primary residence.

    Fewer lenders offer loans for mobile or manufactured homes, but whether supported by Freddie Mac/Fannie Mae or FHA or VA, if the property meets the above criteria, you’re more likely to qualify for financing (granted you also meet the personal requirements for the loan type, such as credit score).

    3. Chattel loans
    If you are moving into a community or “park” where you lease the land, you won’t qualify for a traditional mortgage. Instead, you will use a chattel, or personal property, loan.

    Banks see manufactured homes as personal, movable property, so a chattel loan acts similarly to an auto loan. The bank is financing the structure, not the land, which can be perceived as higher risk. Interest rates will likely be higher than a mortgage, you might qualify for a lower amount, and loan terms are usually shorter—but, approval can be quick and easy compared to conventional financing.

    4. Dealer financing
    A final financing option is by getting a loan directly through the manufactured home provider. Just like a car dealership, manufactured home retail dealers work with a network of lenders that provide financing at the point of sale—handling purchasing paperwork, factory coordination, and delivery timing all at once.

    While it’s convenient and can be an option for buyers with unique credit situations, dealer financing might not come with the most competitive interest rates or loan terms.

    Do manufactured homes appreciate in value?

    The long-held belief in real estate is that a manufactured home depreciates like a car. The reality is that manufactured homes can—and do—appreciate. According to data from the Urban Institute, manufactured homes that are titled as real property have appreciated at rates nearly identical to traditional, site-built homes, growing over 200% since 2000. 

    The catch is that appreciation isn’t guaranteed by the house alone: when you own the land and the home together, the home becomes a fixed part of a larger real estate investment. As the neighborhood improves and land values rise, your home’s value rises right along with it.

    However, if the home is on leased land in a park, the value may stay flat or even decrease because the primary asset (the land) belongs to someone else.

    Title elimination

    Most manufactured homes come with a vehicle title from the DMV. Title elimination, or de-titling, is the legal process of surrendering that vehicle title and recording the home as a permanent improvement to your land.

    This shift makes it easier for future buyers to qualify for traditional mortgage financing, which can improve resale value. Lenders and appraisers also tend to view de-titled homes as more permanent, helping support long-term equity.

    Pros and cons of manufactured homes

    Pros

    • Affordability: You can often get twice the square footage for the same price, or less, as a traditional home.
    • Speed: You can move into a brand-new home in months, rather than the year or more it takes to build on-site.
    • Consistency: Factory builds mean no weather damage during construction and standard multi-point inspections.

    Cons

    • Financing: Unless you own the land and eliminate the title, your loan options may be more limited and carry higher interest rates.
    • Zoning: Not every neighborhood or county allows manufactured homes, or they need to meet specific criteria, so you’ll need to check local laws carefully.
    • Resale: The value depends heavily on land ownership, the age and condition of the structure, and if the home is set on a permanent foundation. Stigma might also affect the buyer pool, even as manufactured housing increases in quality and design.

    Is a manufactured home right for you?

    At the end of the day, a manufactured home can be a faster, more affordable path to homeownership—and manufactured housing is only getting better and more attractive as time goes on. 

    A manufactured home might be a good fit if:

    • You’re a first-time buyer looking to own a house at a more approachable price point. Even if on leased land, the monthly payments might be lower than renting in your area, allowing you to save at a greater rate.
    • You’re a landowner who wants a quality, modern home without the stress and scope creep of a traditional construction project.
    • You’re retiring and want to trade a high-maintenance family home for a brand-new, energy-efficient space—or live in a low-maintenance park community with others.

    The mobile home image of the 1970s is fading fast, and today’s manufactured houses offer a homeownership solution that doesn’t require a lottery win—just a little bit of research and the perfect place to put it.

    Ashley Cotter

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  • How Do Real Estate Auctions Work? Buying a Home at Auction

    Key takeaways

    • Buying a home at auction may give you a lower price, but you could risk overpaying.
    • Auctions are held online or in person, but you’ll need to show proof of funds in advance.
    • Research the property in advance to identify red flags, such as liens or major repairs.

    The homebuying process involves a lot of steps; however, there are non-traditional ways you can buy a home. One of these options is buying a home at auction. Buying at auction can move faster than a traditional sale, but it also offers fewer protections for buyers. If you’ve never heard of buying a house at auction, this Redfin article will outline the process for you. We’ll answer your questions about how real estate auctions work and what to bring on auction day. Whether you’re considering a home in Pittsburgh, PA, or are house-hunting in Raleigh, NC, here’s how you can buy a house at auction.

    What is a real estate auction?

    A real estate auction is a public sale of a property, either by a homeowner, homebuilder, the government, or a bank. Properties are typically sold to the highest bidder, though some auctions allow sellers to reject bids below a certain price. The most common type of auction is of bank-owned properties, where the bank auctions a home instead of selling it as a foreclosure. 

    Reasons homes may be sold at auction

    Properties may be sold at a real estate auction for a variety of reasons, but these are the most common.

    Foreclosure: Lenders or banks may assume ownership of a property where the homeowner has defaulted on their loan. They may sell the home at auction to recoup the money they have already lost. 

    Tax delinquency or other law violation: If someone fails to pay their taxes and owes the government a lot of money, or if they have violated some other type of federal law, the government can seize their property and then auction it off.

    Estate sales: If someone has inherited a home they don’t want to keep, they may opt to auction off the home. This can also occur if there are disagreements between inheritors, financial problems, or a desire for a quick sale. 

    Homebuilders with high inventory: Homebuilders may choose to auction a group of homes to sell them all at once, especially if they have sat on the market for a while without much interest from buyers.

    How do real estate auctions work?

    Housing auctions vary, with some guaranteeing the sale to the highest bidder, while others allow sellers to reject bids that are too low. Auctions are held online or in person. Knowing the types of real estate auctions and bidding structures can help you decide if it’s right for you and your budget. 

    Types of real estate auctions

    There are three common types of real estate auctions:

    • Minimum bid auction: There is a minimum price that the auctioneer will accept, and it is generally published in the auction listing materials. The auction bidding will start with this pre-determined number. 
    • Absolute auction: The property is sold to the highest bidder, regardless of price. There is no minimum bid and no option for the seller to reject the winning offer.
    • Reserve auction: The seller picks a minimum bid they are willing to accept, but bidders do not know what this price is. The seller has the right to review the bids and accept or reject the highest offer within a set period of time.

    Types of auction bids

    At an auction, there are two primary types of bidding structures:

    • Blind bidding: You’ll submit a bid without knowing what the competing bidders have offered. This option can be advantageous to sellers who may receive a much higher bid than expected. This format can increase the risk of overpaying, especially for less experienced buyers.
    • Open bidding: You’ll submit bids knowing what the other bidders are offering. This option gives every bidder the opportunity to continue bidding until the highest bidder wins. 

    Online vs in-person auctions

    When you envision an auction, you likely think of an in-person event. There are many auctions offered in person or online, so we’ll cover the difference:

    • Online auction: Many homes listed for auction are through online auctions, with a set time and date. Competition is usually tougher as it appeals to a larger group of buyers. However, it can be more convenient to attend multiple auctions online rather than traveling to an in-person auction. You’ll likely need to pre-register online and provide proof of funds in advance. 
    • In-person auction: Traditionally, auctions have been held in person, with the date, time, and location published online or in papers. You’ll need to attend the auction in person to show proof of funds and bid on the property. Each auctioneer may have different bidding rules, but the auction will typically go on until the highest bidder wins. 

    What to bring to a real estate auction

    When you sign up for an auction, there will be requirements ahead of time and on the day of the auction. Here are some of the common items you need to bring on auction day.

    • Cash, certified check, or cashier’s check: To pay auction fees, bidding fees, and an earnest money deposit on the home. Sometimes proof of funds is needed in order to register for the auction. 
    • Loan documentation: If financing is permitted in the auction, bring your proof of financing that shows you are pre-approved to purchase the property.
    • Photo ID: To show proof of your identity.

    How to buy a home at auction in 6 steps

    Buying a home at an auction requires a different approach than the standard method of working with a real estate agent, finding a home on the MLS, making offers, and negotiating with sellers. Here’s what you need to know if you’re buying a home at an auction.

    1. Research the property

    To find a home to buy at auction, you can start by reviewing auction listings. Research and learn about the homes scheduled for auction, as well as the dates, times, and locations. Your county recorder’s office or website is usually the place to find this information, or you can also check resources like the U.S. Treasury’s Real Property Auctions. 

    Once you have narrowed down your options, take the time to drive by the homes and see what the condition looks like, what the neighborhood is like, and if there are any immediate red flags. You can look up the property online to see its history before making the decision to attend the auction. 

    In some cases, open houses are held, allowing you to tour the property before the auction date to determine how much you’re willing to spend, what renovations will be necessary, calculate your bottom line, and estimate your total investment.

    2. Determine a budget

    Determining your maximum budget is critical when buying at auction. Your bid is final – there’s no negotiation afterward.

    You may have more room in your budget if you plan to live in the home as-is. You may want to lower your budget if you expect to make significant repairs or remodel or resell for a profit. 

    Here are some factors to help determine your budget:

    • Look at comparable properties: Also called comps, comparable properties are recently sold homes in the area that have similar features, size, and layout. Real estate agents use comps to help determine a home’s value. You can also use comps to help determine what the house may be valued for. 
    • Use an affordability calculator: A home affordability calculator can help you determine a reasonable budget for your homebuying goals. If the auction allows you to obtain financing, you can use a mortgage calculator to see how much you can afford. 
    • Factor in home improvement costs: Homes for sale at auction may need additional maintenance or repairs, so it’s best to budget more than you think you need. According to a 2025 study by Angi, the average cost of a complete home renovation is $52,213, though this can be higher or lower depending on what needs to be completed.
    • Determine closing costs and fees: You’ll still be expected to pay closing costs for an auctioned property, typically between 2 to 5% of the home’s purchase price. Many auction companies add a “buyer’s premium,” which is an additional fee paid to the auction house, often around 10%.

    Once bidding starts, emotions can take over. Setting a hard limit ahead of time helps prevent overpaying.

    3. Secure your financing

    At most auctions, the winning bidder is required to provide a cashier’s check for the minimum amount the auction holder requires. You must pay auction fees and bidding fees as well as put down a deposit, called earnest money, before you leave the auction site. That means you’ll need enough liquid assets to cover these costs, typically 5 to 20% of the home’s value, in order to purchase a home at auction.

    Some auctions do allow financing, though most do not. If you’re interested in a property that’s being sold at auction, find out if the auction permits financing and get pre-approved ahead of time.

    4. Register for the auction

    Registering for the auction is an important part of the process, as you’ll need to meet several qualifications in advance. Whether the auction is online or in person, there will be different requirements. Here are some of the common steps to expect during registration:

    • Pre-registration: It’s common for auction companies to allow or require you to pre-register for the auction. You’ll typically need to submit personal information, show proof of funds, and agree to the auction company’s terms and conditions. 
    • In-person registration: If you’re attending a live auction, you’ll need to register when you arrive in order to complete additional paperwork, show proof of funds, and receive your bidder paddle or number. If the auction allows financing, you will likely need to show your pre-approval. 
    • Deposit requirements: In most cases, you will need a cashier’s check, certified check, or cash for your earnest money deposit. It’s often required to gain entry to the auction.
    • Read the auction rules: Every auction’s rules differ, so read through them carefully. There are likely specific bidding rules, payment due dates, and conditions for purchasing. 
    • Review the terms of the auction: Thoroughly read the auction’s terms and conditions, information about property disclosures, and allowed bidding increments. Conducting this due diligence can help you understand the auction process better. 
    • Online auction requirements: If the auction you plan to attend is online, you may need to provide your credit card information for verification. You may also need to pay a refundable deposit to secure your spot in the auction.

    5. Start the bidding 

    On the day of the auction, plan to arrive early, whether the house you want to bid on is first or not. You can observe how the previous auctions are going and if homes are selling for reasonable prices or not.

    Listen carefully to the auctioneer’s rules and any new information about the home. For example, if the home is “subject to all liens,” you would take responsibility for the liens on the home at the time of purchase. Know where you want to draw the line and stick to your budget.

    6. Begin the closing process

    If you are the winning bidder on the home, you’ll then proceed to pay the earnest money, bidding fees, and auction fees. From there, the closing process will begin, which can take around 30 to 45 days. Auction closings experience fewer delays, although it can still happen. If you miss payment deadlines, you could risk losing the house. 

    Should you buy a house at auction? Pros and cons to consider

    Auctions may seem like a great way to purchase a home at a lower price, but first-time homebuyers should exercise caution.

    Pros of buying an auctioned property

    • Potentially lower purchase price
    • Faster closing timeline
    • Less buyer competition
    • Possible investment upside if purchased below market value

    Cons of buying an auctioned property

    • Homes are often sold as-is and may need major repairs
    • Limited or no inspection opportunities
    • Outstanding liens or title issues
    • High risk of overpaying due to competitive bidding

    FAQs about how real estate auctions work

    Is buying a home at auction a good idea?

    Buying a home at auction can be a good idea if it matches your homebuying goals and you’re prepared for any risks. You likely will not be able to get a home inspection in advance, and you could risk overpaying for the home. But if you have the room in your budget and are willing to take on major repairs, it could be a good fit for you. 

    How can I avoid overpaying at an auction?

    If you participate in an auction, make sure that you know the maximum amount you’ll bid and walk away when the bids rise higher than that amount. View homes for sale in your price range to get an idea of how much homes are selling for and determine a ballpark price range for the auction.

    What is a buyer’s premium?

    A buyer’s premium (BP) is an extra fee that the winning bidder must pay. The amount goes directly to the auction house to cover their costs. Buyer’s premiums can range from 10 to 25% of the purchase price. You should know the percentage in advance of the auction.

    Do I need a real estate agent to buy a house at auction?

    No, you’re not required to work with a real estate agent if you want to buy a home at auction. A good real estate agent can give you advice on finding the right home for you, but you don’t need a real estate agent when buying an auctioned property. 

    Do I have to attend auctions in person?

    As mentioned above, there may be homes auctioned off online that do not require in-person attendance. However, if the auction is in person, you most likely need to attend, or you may be allowed to bid via phone or an in-person representative. The rules vary by auction; be sure to read the requirements thoroughly before signing up.

    Alison Bentley

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  • Difference Between Agents and Brokers in Real Estate, Explained

    What is the difference between a real estate agent and a broker? A real estate agent is licensed to represent buyers and sellers, but they must work under a supervising broker. A real estate broker has completed advanced education and licensing requirements, allowing them to work independently, manage their own firm, and hire agents. In this Redfin real estate article, we’ll explore the differences so that you can make an informed decision as you look to sell your home in Salt Lake City, or buy in Evanston. 

    What is a real estate agent?

    A real estate agent is a professional who has passed a state-mandated course and licensing exam. This license permits them to assist clients with buying and selling property. However, this basic license requires that the agent affiliate and work under a licensed broker.

     

    Their core responsibilities typically include:

    • Showing you homes.
    • Handling market research and comparative sales data.
    • Negotiating on your behalf.
    • Preparing and submitting official paperwork, such as offers and counteroffers.

    Agents are the day-to-day contact and work to ensure your transaction is smooth and successful.

    Types of real estate agents:

    Real estate agents typically specialise in specific roles or client needs. Understanding the different types of agents can help buyers and sellers choose the right professional for their situation.

     

    • Buyer’s agent: They help clients search for properties, schedule showings, make competitive offers, and negotiate contract terms. Buyer’s agents are legally obligated to act in the buyer’s best interest throughout the transaction.
    • Seller’s agent (Listing Agent): Their responsibilities include pricing the home, marketing it to potential buyers, coordinating showings, and negotiating offers. Listing agents aim to secure the best possible price and terms for the seller.
    • Dual agent: A dual agent represents both the buyer and the seller in the same transaction. Because the agent must remain neutral, they cannot advocate fully for either party. Dual agency is legal in some states but restricted or prohibited in others due to potential conflicts of interest.

    What is a real estate broker?

    A real estate broker is an agent who has further education and practical experience and has passed a separate, more rigorous broker’s licensing exam. This advanced license is essential for anyone who wants to open their own brokerage firm or work without a supervising principal.

     

    Because a broker’s license indicates a higher level of training and expertise, the broker has more capabilities:

    • Supervision: They are legally responsible for the actions and transactions of all the agents working under them.
    • Independence: They can operate their own brokerage or real estate office.
    • Advanced knowledge: Their additional training includes legal and ethical requirements for managing a real estate business.

    All real estate transactions are legally processed through a broker, whether the client is working directly with a broker or one of their agents.

    Types of real estate brokers:

    Real estate brokers have additional licensing and responsibilities beyond those of agents. Some brokers work independently, while others oversee teams of agents.

    Managing broker: A managing broker oversees the daily operations of a real estate office. They are responsible for supervising agents, ensuring legal compliance, handling contracts, and resolving disputes. Managing brokers may also recruit and train new agents.

    Principal broker: The principal broker is legally responsible for all real estate activity conducted under a brokerage. This includes transactions, escrow handling, and adherence to state laws. Every real estate brokerage must have a designated principal broker.

    Associate broker: An associate broker holds a broker’s license but chooses to work under another broker instead of operating their own brokerage. They often have more experience than agents and may take on mentoring or leadership roles within the firm.

    How to choose between working with an agent or a broker

    As a home buyer or seller, you must consider the difference between a real estate agent and a broker. While they share responsibilities, there are differences to consider that make the best fit for your goals. Most likely, you will start by choosing a real estate agent. When you hire an agent, you are automatically gaining access to the expertise of their supervising broker, as the agent’s work is the responsibility of the brokerage firm.

    • Work with an agent when you need hands-on assistance, strong negotiation skills, and a professional who specialises in your local market. Agents are typically focused entirely on client service.
    • Work with a broker if you are looking to hire a managing partner or if you specifically want to work with the principal of the firm. Some highly experienced brokers choose to work directly with clients as well.

    The most important step is finding a professional, regardless of their title, who has a proven track record, understands your goals, and prioritises your best interests.

    Frequently asked questions

    Does a broker make more money than an agent?

    A broker may have a higher potential income because they can earn a portion of the commission from the transactions of all the agents they supervise, in addition to any commissions from their own sales.

    Can a real estate agent be a broker at the same time?

    Yes. A professional who holds a broker’s license may choose to act as a real estate agent and work under another brokerage, or they may choose to use their broker’s license to open and run their own firm.

    Is one title better than the other for a client?

    Neither title is inherently “better” for a client. While a broker has more advanced training, a highly experienced and successful agent can provide just as effective service. The quality of the individual professional is more important than the level of their license.

    Pablo Alvarez

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  • 2025 Housing Market Year In Review: Is There Anybody Out There?

    13 housing trends that defined another slow year, including record-high house prices, falling mortgage rates, and a gridlocked market 

    2025 was a difficult year for the housing market. The affordability crisis continued. The spring and summer homebuying seasons hardly happened. The homeowner population dropped. Buyers remained out of reach, pushing sellers to offer concessions or price cuts. Add in political issues, including tariffs and a government shutdown, and consumers were dealt a difficult hand.

    Still, there were some positives. Wages increased faster than housing costs for the first time since 2016, and buyers grew more comfortable with 6% mortgage rates, helping ease the rate-lock issue. 

    Regional trends continued, too. The Sun Belt continued its years-long slowdown, while the Rust Belt remained popular.

    “This was another unusual year for housing, with a twist,” said Daryl Fairweather, Redfin Chief Economist. “High prices continued to sideline homebuyers, but this year, home sellers followed suit. As the months went by, more sellers pulled their listings in response to weak demand, tightening an already strained housing supply and helping prop up prices. Unfortunately, affordability is unlikely to improve substantially until homebuilding picks up or mortgage rates plummet.”

    Below are trends, data points, and visuals that defined the 2025 housing market. 

    All data was aggregated from January through November 2025 unless otherwise stated. Data came from Redfin, the U.S. Census Bureau, FRED, NAR, and/or public records. For questions about metrics, read our metrics definitions page.

     

    1. Home prices reached another all-time high

    The U.S. median home sale price reached a new all-time high of $446,000 in June. Overall, prices in 2025 remained above last year’s then-record levels, with every month surpassing the corresponding median sale price from 2024.

    When averaging for the entire year, 2025’s median sale price was 1.7% higher than 2024—around $7,400.

    Affordability remained a major issue for buyers and sellers, especially as tariffs, inflation, and elevated mortgage rates impacted the economy. The Trump Administration has stated that prices will drop in the near future, but economists and consumers are wary. The affordability crisis is accelerating the fastest in rural America, where buyers need to earn nearly twice as much as they did before the pandemic to afford a typical home.

    Luxury prices also spiked in Sun Belt metros like West Palm Beach, helping redefine the upper end of the housing market as wealthy buyers flock south.

    2. San Jose was the most expensive metro area for homebuyers in 2025

    Taking the top spot for the second year in a row, San Jose was the most expensive major metropolitan area for homebuyers in 2025. The median sale price in San Jose averaged $1,617,659, up 3.3% ($51,000) from last year. The metro hit a price peak of $1,700,000 in April, which was $100,000 more than second-place San Francisco.

    • The top six most expensive metros were all in California
    • House prices generally rose across the board, with Cleveland (9.2%), Pittsburgh (7.1%), and Milwaukee (7.1%) posting the largest annual increases.

    The top five most expensive metros to buy a home

    Metro Average median sale price
    San Jose, CA $1,617,658
    San Francisco, CA $1,522,535
    Anaheim, CA $1,198,636
    Oakland, CA $929,792
    Los Angeles, CA $916,401

    3. Detroit was the most affordable metro area for homebuyers in 2025

    Once again, Detroit topped the list as the most affordable major metropolitan area for homebuyers in 2025. The median sale price in Detroit averaged $202,739, up 6.2% (~$12,000) from last year. Even so, the area hit a record high in July, when prices reached $217,000.

    Detroit has been the most affordable major metro for years, with prices consistently less than half the national average. Even when you zoom in on individual cities, Detroit remains cheapest: The average median price for the city proper was $92,303. 

    However, many locals still struggle to afford it. Detroit has one of the highest poverty rates and lowest median household incomes in the country, exacerbating existing inequalities and making housing harder to find for underrepresented groups. Prices have been rising faster than the national rate since mid-2024, too, which has added to the pressure.

    • The vast majority of low-cost cities are in the Rust Belt, where incomes are lower, homes are older, competition is higher, and prices are rising fastest. 
    • Prices dropped the fastest in Sun Belt metros, with Jacksonville (-3.1%), Oakland (-2.7%), and Dallas (-2.2%) posting the largest annual decreases. 

    The top five most affordable metros to buy a home

    Metro Average median sale price
    Detroit, MI $202,739
    Cleveland, OH $243,830
    Pittsburgh, PA $250,250
    St. Louis, MO $280,294
    Philadelphia, PA $293,774

    4. Home sales remained historically slow

    An average of 424,078 homes were sold every month in 2025, similar to last year but far below the 2020 rate, when 585,000 homes sold every month. When looking at just existing home sales, Redfin expects there to be about 4.24 million in 2025—on the lowest end of the 4-6 million average and in line with 2023 and 2024. Note that home sales are seasonally adjusted.

    Year-over-year home sales were mostly flat, but sunk heading into 2026. In 2024, home sales increased because buyers accepted that mortgage rates would remain elevated, but that optimism dropped this year as prices kept rising and economic uncertainty rose.

    This slowdown affected all corners of the market, including luxury. High-end home sales fell to their lowest level since at least 2013. 

    • The month of May had the fewest home sales, at 416,400. 
    • Home sales increased across much of the Rust Belt and South, while Florida’s slowdown persisted.
    • Ultra-luxury homes still changed hands at a normal pace, as wealthy buyers were better insulated from economic pressures.

    The top five metros where sales dropped the most

    5. Mortgage rates steadily dropped throughout the year

    “Mortgage rates again played a large role in quieting the housing market this year, but with notable improvements,” noted Fairweather. “Rates averaged 6.6% in 2025, compared to 6.7% last year. While this didn’t bring many buyers out of the woodwork, it did bring costs down, which we expect to only improve in the coming years.” 

    Zooming out, weekly average 30-year rates fell nearly an entire percentage point from their high of 7.16% in January to their low of 6.19% in October, before evening out at ~6.3% to close out the year. Technically, 2024’s rates dipped slightly lower (6.14%), but 2025 saw more consistent relief.

    Zooming in, though, mortgage rates were fairly volatile, with some days seeing large shifts in anticipation of tariff announcements, economic reports, or Federal Reserve (Fed) meetings. The government shutdown added a layer of uncertainty, too.

    Redfin predicts that mortgage rates will average 6.3% in 2026.

    6. Housing inventory increased substantially—with a catch

    On average, 1.48 million homes were listed for sale or pending every month in 2025, up an astonishing 18.3% from last year. Monthly inventory peaked at 1.63 million in July.

    However, as the year went on, inventory growth slowed as sellers realized they couldn’t get the prices they hoped for and buyers became harder to come by. 

    Starter homes were a different story. Starter-home listings—those in the 5%-35% price tiers—actually rose alongside sales. Consequently, prices increased quickly: In some metros, a starter home now costs $1 million.

    • Housing inventory rose the most in the Sun Belt and pricey coastal metros, where buyers were in charge. Inventory fell in the most competitive cities, clustered in the Rust Belt.

    The top five metros where inventory increased the most

    The top five metros where inventory decreased or rose the slowest

    7. Months of supply reached a recent high

    While inventory measures the number of homes currently available for sale, months of supply measures the amount of time it would take those homes to sell at the current rate of sales. Four to five months of housing supply is considered a balanced market, with more indicating a buyer’s market and less indicating a seller’s market. 

    The average stock of housing supply across every month in 2025 was 3.5 months, up from 3 months last year. 

    But as buyers stepped back later in the year, more sellers decided to hold off on listing their home altogether, pushing supply back down. It remained a strong but unusual buyer’s market, where costs were high but competition was low. Through the first eight months of the year, just 2.8% of the nation’s homes changed hands—a marginal improvement over last year’s low. 

    That said, conditions varied sharply by region. In some cities, buyers had to fight for every home. Cities in Upstate New York and the Bay Area were red-hot, often selling within two weeks.

    8. New listings jumped nearly 7%

    In line with inventory, new listings made major gains this year. An average of 565,578 homes were listed every month, up 6.8% from last year and well above 2023’s record low. New listings have consistently improved over the past three years.

    These listings translated to slightly more sales, but high prices kept most buyers on the sidelines. Plus, as sellers became more skittish later in the year, new listings dropped significantly. Supply improved, but end-of-year trends pointed towards a tighter market.

    9. New construction continued to lag

    The U.S. saw an average of 1.38 million new homes started monthly in 2025, unchanged from 2024 and down from 1.42 million in 2023. 

    According to most experts, the largest contributor to the U.S. housing crisis is a lack of home building. There just aren’t enough homes for people who want them. The deficit changes from source to source, but most estimates range from two to six million units. 

    Building plummeted during the Great Recession but saw a small resurgence during the pandemic, particularly in disaster-prone areas. However, construction began losing steam in 2022, and 2025 continued the decline. The slowdown has largely been due to low buyer demand and higher development costs, leaving many builders focused on selling existing inventory.

    The housing shortage gets worse when you look at affordable housing (which includes rentals). Nationwide, there is a shortfall of 7.1 million homes, with zero states meeting their affordable housing needs.

    Still, there are signs of optimism. “The current market is discouraging, but there is reason to hope,” reassured Chen Zhao, Redfin’s Head of Economics Research. “Policymakers and voters have made it clear that improving affordability is a top priority, primarily by building more low-cost homes. Multiple bipartisan bills aimed at doing just that are making their way through the government, which could influence development in 2026.”

    • Housing completions fared better than housing starts, with an annualized rate of 1.6 million new homes finished as of August (the most recent data available).
    • Permits to build new housing fell this year, reversing course from last year but in line with their post-pandemic slump.

    10. Inflation crept back up as economic uncertainty simmered

    Inflation was key to the economy in 2025, as President Trump enacted policies including tariffs, a new spending bill, and immigration crackdowns—actions that many economists view as inflationary. In fact, a report found that inflation could have dropped by about one-third if it weren’t for tariffs.

    Inflation remained well above the Fed’s 2% target, generally averaging around 2.7%. The Fed cut interest rates three times but remained cautious amid economic and job market uncertainty.

    The rise of AI also played a large role in the economy. As AI investment ramped up, which fueled essentially all of the year’s stock market gains, fears of an AI-bubble grew louder.

    11. The typical home took over a month and a half to sell

    Homes spent an average of 48.5 days on the market in 2025—nearly six days longer than last year and the longest since the pandemic. Sales continued their dramatic decline from the record-breaking pace seen in 2021. 

    Even so, by historical standards, homes sold relatively quickly. In 2012, the typical home sat on the market for 80–90 days before selling.

    The slowdown was especially visible in September, when 70% of all listings nationwide had sat on the market for more than 60 days (called a “stale” listing). Former pandemic boomtowns like Miami, FL (84.6%) and Austin, TX (82.8%) saw even higher shares of stale listings, demonstrating how much they have slowed. 

    Time on market varied widely by region, with Rust Belt metros seeing very fast sales and Sun Belt metros easing further.

    • Delistings, where a seller removes their home from the market, remained elevated due to limited demand. 
    • Austin became the strongest buyer’s market later in the year, with nearly twice as many home sellers as buyers. 

    The top five metros where homes sold the fastest

    The top five metros where homes sold the slowest

    12. All-cash purchases remained at historic highs

    30% of homes were purchased entirely with cash in 2025—down from 31% last year but still well above pre-pandemic levels. 

    All-cash sales generally follow the same trend as the rise and fall of mortgage rates: When rates move down, the percentage of all-cash sales moves down; when rates go up, all cash-sales go up. So, as mortgage rates skyrocketed in 2022, all-cash purchases followed suit. They have remained elevated since, but are falling as mortgage rates drop and economic uncertainty rises.

    Luxury buyers and investors were much more likely to pay in cash, which helped them bypass interest rates altogether and secure a better deal. All-cash payments were largest in California, where housing is the most expensive, and most popular in Florida and the Rust Belt.

    The top five metros with the highest share of all-cash purchases in 2025

    Data is from a Redfin analysis of county records across 40 of the most populous U.S. metropolitan areas, dating back through 2011.

    13. Investor activity was flat, but still well above pre-pandemic levels

    Real estate investors purchased an average of 18% of all homes in 2025—unchanged from 2024 but trending downward. Activity varied by region, with some of the largest pullbacks in parts of Florida, particularly in the condo market. 

    Compared to the blistering pace investors set in 2021-2022, this year was relatively calm. Investor market share had already dropped in 2023 as higher borrowing costs and prices curbed consumer demand, and it hasn’t rebounded since. 

    Even so, investor market share remains far above historical norms. In 2015, investors owned around 15% of homes, and in 2000, their share was just 7%. 

    The top five metros with the highest investor market share in 2025

    Data was analyzed on a quarterly basis and includes all property types unless otherwise stated. Data is through September (Q3). Metro-level data measured 40 of the most populous U.S. metropolitan areas. 

    Looking forward

    The 2025 housing market was another difficult one for many homebuyers and sellers, but what does Redfin predict for 2026? Read our 2026 Housing Market Predictions to learn more.

    Jamie Forbes

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  • Condo vs House: Which Is the Better Choice?

    Before you finalize your home purchase, you must decide what type of structure best fits your life. The choice between buying a condo and a house is one of the biggest decisions you’ll make, as it impacts your finances, lifestyle, and day-to-day responsibilities. 

    Neither option is inherently better. The “right” choice is the one that aligns best with your goals, financial situation, and comfort level with home maintenance. This Redfin guide breaks down the pros and cons of each to help you make the best decision as you look for a condo in Miami or a house in Houston. 

    Ownership and maintenance

    When you buy a house, you own the entire structure and the land it sits on. You are responsible for everything from the roof to the foundation, the yard, and the fence. This means total control over renovations, but also total financial responsibility for all repairs.

    • House maintenance: You are solely responsible for all maintenance and repairs. This offers freedom to make changes but requires you to budget and coordinate all work.

    When you buy a condo, you own the interior of your individual unit. You co-own the common areas, the building structure, and the land with other unit owners. This is the main reason why condos are often considered a low-maintenance option.

    • Condo maintenance: The HOA is responsible for all exterior maintenance, including landscaping, common area repairs, and building upkeep. You pay monthly HOA fees to cover these costs.

    Cost: purchase price and monthly expenses

    The initial purchase price for a condo is typically lower than a house in the same location. This can make homeownership more accessible, especially in expensive urban markets. However, the total cost of ownership is more complex due to condo fees.

    • Condo expenses: You pay your mortgage, property taxes, and monthly HOA fees. The fees cover shared costs like insurance for the building exterior, common area utilities, and a reserve fund for major repairs.
    • House expenses: You pay your mortgage and property taxes. You are also responsible for all home insurance and must budget separately for maintenance and future repairs.

    A house gives you more predictable expenses in the short term, but you must be prepared for high, unexpected costs when a major system, like the roof or furnace, fails. 

    Amenities and lifestyle

    Your lifestyle is often the deciding factor in the condo versus house debate. Condos are ideal for people who prioritize convenience and community. Houses are better for those who need more space, privacy, and control.

    Condo living often includes shared amenities that would be expensive for a single homeowner to purchase or maintain alone. Typical condo amenities:

    • Pools and hot tubs
    • Fitness centers and gyms
    • Community rooms
    • Security and concierge services

    A house, on the other hand, provides the benefits of space and privacy. You have your own yard, no shared walls, and no rules regarding your property’s exterior, beyond what local zoning dictates. If you have pets, need a dedicated home office, or enjoy gardening, a house will usually offer a better fit.

    Quick comparison: condo vs. house

    Feature Condo House
    Upfront cost Typically lower purchase price Typically higher purchase price
    Maintenance Exterior and shared areas maintained by HOA Homeowner responsible for all maintenance
    Customization Limited (especially exterior) Full control over interior and exterior
    Privacy Less (shared walls and common areas) More (no shared walls, private yard)
    Amenities Often included (e.g., pool, gym, security) Rare, unless added by homeowner
    HOA fees Required monthly dues Rare, unless in a planned community
    Rules/restrictions Must follow HOA rules Minimal (only local codes/zoning)
    Location Often in city centers or dense urban areas More common in suburbs or rural areas
    Yard/outdoor space Usually none or shared Usually includes private yard or outdoor space
    Investment potential May appreciate more slowly Often has stronger long-term appreciation

    The “better” option depends entirely on your circumstances, priorities, and lifestyle. Purchasing your future home is an important decision that must be deeply considered. The following guidelines suggest which style of home is best for you: 

    Consider a condo if you:

    • Value low-maintenance.
    • Desire access to shared amenities like pools and gyms.
    • Prefer urban living and proximity to the city.
    • You are looking for a more affordable entry into homeownership.
    • Don’t mind adhering to the HOA price, rules, and regulations.

    Consider a house if you:

    • Prefer privacy and a private outdoor space.
    • Want complete control over your property’s appearance and modifications.
    • Are prepared for the responsibilities and costs of all home maintenance.
    • Prioritize potential long-term property appreciation.
    • Need more space for a growing family or personal hobbies.

    Final thoughts on buying a condo vs a house

    Ultimately, both condos and houses can be excellent investments and provide a comfortable home. By carefully weighing the pros and cons presented along with your financial situation and lifestyle preferences, you can make the decision that best fits your needs. 

    It’s always advisable to consult with a real estate agent and a financial advisor to navigate the complexities of homeownership.

    Pablo Alvarez

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  • Your Guide to Starter Homes in Today’s Housing Market: Do They Still Exist?

    • A starter home is the most affordable type of house or living space a first-time buyer can purchase.
    • The median price of a starter home in September 2025 was $260,205.
    • What used to be a 3-to-7-year stay in a starter home is now stretching much longer as the market remains competitive and interest rates stay high.
    • Deciding whether to keep renting, buy a starter home, or go straight to a forever home depends on your personal financial and life goals.
    • While starter homes aren’t as widely available as they once were, they can still be found in certain markets.

    If you’re thinking about buying your first place, a starter home is your launchpad into real estate. Typically the most affordable option for first-time buyers, starter homes are smaller and come with a more manageable price tag than the broader market. 

    The concept took off after World War II, when small, affordable homes helped returning soldiers and their families step into homeownership, a key part of the American Dream.

    Today, things look different. Cheap land is harder to come by, and buyer expectations have also evolved. In cities and busy suburbs, starter homes might look like a condo in Miami, FL or a townhouse in Portland, OR rather than a quaint single-family home. Rising land costs, limited inventory, and changing buyer demographics all influence what qualifies as a starter home today.

    “Starter homes aren’t what they used to be,” says Redfin Senior Economist Elijah de la Campa.  “Today, a small fixer-upper condo is often all a first-time homebuyer can afford. The American Dream is changing; for many, it no longer involves a house and a white picket fence.”

    In this article:
    What is a starter home?
    How much does a starter home cost?
    How long should I stay in a starter home?
    Starter home vs forever home vs renting
    Where can I find affordable starter homes?
    How to buy a starter home
    Is it still possible to buy a starter home?
    FAQs

    So, what is a starter home?

    Historically, starter homes were smaller, more affordable houses designed to help first-time buyers enter the market. Often around 1,200 square feet with two bedrooms and one or two baths, these homes sometimes came with trade-offs like less desirable locations or fewer upgrades.

    Now, a home’s price is likely to define if it is a starter home—and what’s considered “entry-level” homeownership can vary widely by region. In high cost of living areas, homes that need TLC often sit at more approachable price points for first-time home buyers than turnkey homes. But with renovation costs on the rise, demand for move-in-ready homes is starting to outpace that of fixer-uppers.

    How much does a starter home cost?

    Generally, the cost of a starter home is priced below the average home in any given area. According to Redfin data, the median price of a starter home in September 2025 was about $260,205, and the average income needed to afford one was around $79,400.

    But the national average and the cost of houses for sale in your area can look drastically different. In many places, rising home prices have outpaced income growth, making affordability a big challenge. The overall median home price in the country, for instance, grew from $296,485 in December 2019 to $427,179 in December 2024, a jump of 44%. 

    High demand from first-time buyers and downsizers, combined with limited entry-level inventory, has created a competitive market. In fact, the average age of a first-time buyer in the US is now 38, up from 35 the previous year.

    “Starter home prices have climbed so much over the last decade that even with mortgage rates coming down from their peak, affordability is still a huge hurdle,” says David Palmer, a Redfin Premier agent in Seattle. 

    “At the same time, buyers who already own a home have more leverage—they can use the equity they’ve built to make stronger offers. That means entry-level buyers are often losing out to move-up buyers who have deeper pockets.” 

    Starter Home Affordability by Metro: 10 Most Populous Metros (September 2025)

    Metro Area Income needed to afford median priced starter home Median starter home sale price Estimated median household income % of starter homes affordable at median income
    New York City, NY $166,318 $471,847 $104,146 2.27%
    Los Angeles, CA $183,805 $641,624 $100,550 0.07%
    Chicago, IL $83,203 $230,458 $94,673 98.16%
    Houston, TX $83,264 $244,027 $84,918 97.61%
    Dallas, TX $102,048 $294,826 $96,721 79.98%
    Miami, FL $110,857 $347,950 $84,092 6.70%
    Atlanta, GA $87,353 $276,505 $96,315 71.50%
    Philadelphia, PA $52,834 $170,030 $94,757 96.31%
    Washington, DC $122,768 $390,711 $131,672 82.25%
    Phoenix, AZ $103,450 $350,000 $94,009 16.13%

    Redfin data as of September 2025

    How long should I stay in a starter home?

    In the past, many homeowners stayed in their starter homes for around three to seven years building equity. However, it’s now common to see homeowners stay put longer, averaging 12 years in many parts of the country. First-time buyers in particular are taking longer in their search for a home that meets their needs more long-term.

    How long you actually stay in a starter home often depends on your personal situation. Maybe your family grows, you get a new job that requires a move, or your financial situation changes, allowing you to look for a bigger or more permanent “forever home.” 

    For first-time buyers and seasoned homeowners alike, the decision to continue living in their current home helps avoid rising home prices and potentially higher interest rates—otherwise known as the “lock-in” effect.

    Starter home vs forever home vs renting

    So is buying a home better than renting in today’s economy? If you’re thinking about buying a starter home, it’s helpful to compare it to other options like continuing to rent, or jumping straight into  a “forever home” to choose what works best for your long term goals.

    Is renting or buying better long term?

    For many, deciding whether to rent or buy is not only about the numbers, but what kind of stability and flexibility you want in your life. 

    Buying a home can bring long-term financial and emotional rewards. Each mortgage payment helps you build equity, giving you something tangible for your money. Rent, on the other hand, can increase over time, while a fixed-rate mortgage offers predictable payments. Plus, homeowners might qualify for tax breaks on mortgage interest and property taxes.

    But if you’re saving up for a strong down payment, expect to move in a few years, or prefer fewer responsibilities, renting could be a smart choice over buying.

    Pros of buying a starter home over renting

    • The opportunity to build long-term wealth through home equity and appreciation. The payments you make on your mortgage go towards your personal wealth, rather than to a landlord. 
    • More stable: predictable and steady monthly payments and potential tax benefits help with long-term financial planning and budgeting.
    • The freedom to make it your own: paint, remodel, garden. You’re not limited by a lease or landlord permission.
    • Even if it’s not your forever home, a starter home can help you build equity, credit, and make it easier to move up later; and if you sell, that equity can go toward your next down payment.

    Cons of buying a starter home vs renting

    • Buying comes with higher upfront costs: the down payment, closing costs, inspections, and moving all add up—not to mention savings for emergencies. Renting is usually the first month’s rent and a deposit.
    • Maintenance and repairs fall to the homeowner: When you rent, the landlord or property management is responsible for any repairs; if you own your home, the cost and responsibility falls to you.
    • Less flexibility to move: Selling a home takes time and money. If life changes quickly, like a new job in another city, it can be harder to make the move than breaking a lease.
    • In higher cost of living cities, renting can actually be more affordable than owning a home.

    Should I buy a starter home or forever home?

    If you are ready to buy, what kind of home you should look for ultimately depends on your lifestyle, goals, and timeline.

    A forever home is designed for the long haul—usually, for those planning to stay around 10 years or longer. There’s space to indulge in projects or hobbies, host friends and family, and put down roots. But forever homes usually have higher price tags and ongoing expenses that can stretch the budgets of first-time buyers.

    Starter homes, on the other hand, can get you building wealth sooner and gain experience as a homeowner, even if it’s not your dream home yet.

    Pros of a starter home over a forever home

    • More affordable entry point: Starter homes usually have a lower purchase price, a smaller down payment, and more manageable monthly payments.
    • You build equity sooner: Each payment you make on your home grows your investment; and according to Redfin data, lower-priced starter homes are in high demand compared to houses at the top of the price tier.
    • Lower upkeep costs: Smaller, less-expensive homes often come with lower property taxes and less maintenance than larger houses.
    • A faster path to homeownership: A starter home might not have everything on your wishlist, but it helps get your foot in the door of real estate and learn what matters for you in a home.

    Cons of buying a starter home instead of a forever home

    • You might outgrow the space faster than you think, especially if you work from home, want to rent out rooms, or start a family.
    • Starter homes in many areas often need updates or repairs, especially if the home is older.
    • A starter home might not have all the features you want in a home long-term, or be in a less desirable area.
    • You’re more likely to move again, repeating the buying and selling process which can be expensive. If you don’t stay in the home long enough, you might even experience a loss in equity.

    In the long run, while the initial plan might be to move to a bigger place later, some people find that their starter home suits them perfectly and they choose to stay for many years, or even for good. Over time, with some updates, additions, and personal touches, a starter home can become the perfect forever home.

    Where can I find affordable starter homes?

    If you’re looking for affordable starter homes, there are some key locations to watch. Some areas in the Midwest, for instance, could actually see home prices rise due to more people moving to the Rust Belt.

    “Midwest cities have risen in popularity because they’re more affordable than cities in other parts of the country, but many buyers are now widening their search to the suburbs after being priced out of popular urban areas,” says Redfin Chief Economist Daryl Fairweather. 

    Heading south, Texas and Florida are known for having a decent number of starter homes generally priced below the national average, with home building rates and land availability being key factors. On the East Coast, cities like Harrisburg, PA; Rochester, NY; and Baltimore, MD, are looking promising for first-time buyers because they’re relatively affordable and have job opportunities. The Sun Belt region is also seeing growth, with builders drawn to lower land and labor costs. 

    >>See more: The 10 Cheapest States to Buy a House in the U.S.

    How to buy a starter home

    1. Check your finances and readiness

    • Make sure your income is stable, your credit score is in good shape, and you’ve started saving for a down payment and closing costs.
    • Factor in additional costs like property taxes, insurance, and maintenance. This comprehensive Redfin guide walks you through what to budget.
    • Ask yourself: am I ready to stay put for a few years? Owning makes most sense when you plan to stick around. 

    2. Know what you can afford and stick to a budget

    • With starter homes especially, the budget tends to be tighter: consider a smaller sized home, fewer amenities, and lower maintenance expectations so you don’t overextend yourself.

    3. Find your “must-haves” vs your “nice-to-haves”

    • Because you’re buying a starter home, it’s especially useful to write down what you absolutely need (location, commute, number of bedrooms) and what you can compromise on (yard size, high-end finishes). 
    • You’ll probably upgrade later: a lower upfront cost now can mean more flexibility later.

    4. Choose the right location (but expect trade-offs)

    • Location matters: a slightly smaller home closer to work or amenities might make more sense than a bigger home farther out. 
    • Also evaluate resale potential: since starter homes are often short-term stepping stones, you’ll want a neighborhood that remains desirable.

    5. Work with your team (agent, lender, inspector) and start searching

    • Pick a real estate agent who knows the “starter home” market in your area and can help you find realistic opportunities.
    • Start touring homes with your list in mind. For each property you visit, pay attention to  the condition, upkeep needs, how much work you’re willing to take on.

    6. Make an offer and be realistic

    • Don’t get into a bidding war for a home that puts you above your budget just because you feel you have to.
    • Think about what contingencies you’ll include (like inspection and appraisal) so you don’t walk into unexpected costs or issues.

    7. Inspect, appraise, and close the deal

    • Once you’ve secured an offer, you’ll move to the home inspection. As a first-time homebuyer, getting an inspection protects you from buying a money pit.
    • After everything checks out, you’ll get the home appraised, close, and move in. (This process can take 45-60 days after offer acceptance, but timelines vary.)

    8. Plan ahead for your time in the home

    • While starter homes are often thought of as the first of many homes, many people stay longer than planned. As you live there, treat it as both a home and an investment.
    • Be aware of resale costs: if you sell too soon you might not build enough equity. Staying at least two years ensures you won’t pay capital gains tax, but it could take even longer for your home value to grow enough to make sense to sell.

    >> See more: How to Calculate Home Equity

    Is it still possible to buy a starter home?

    While high demand, limited inventory, rising construction costs, and competition from investors and downsizers have made starter homes harder to find, buying one is still possible—especially with a bit of strategy and flexibility.

    One promising trend is the increase in housing inventory, particularly in the entry-level market. More available homes mean more options and, in many areas, less intense competition than in recent years.

    Smaller homes and multi-family options like duplexes and townhouses are also gaining popularity as buyers prioritize affordability. Though the path to homeownership may still involve compromise, rising supply and slowing price growth are opening more doors for first-time buyers. While the housing market is constantly changing, starter homes are still a viable solution to homeownership.

    FAQs about starter homes

    What does a starter home mean?
    A starter home is usually a homebuyer’s first step to homeownership: a smaller, more affordable place that helps you enter the housing market. While it might not immediately be your dream home, a starter home allows you to start building equity and gain experience as a homeowner. Over time, that equity can help you move up to a larger or more permanent “forever” home.

    What is a good starter home?
    A good starter home balances affordability, location, and potential. It’s a place that fits your budget today but still meets your basic needs: enough bedrooms, a manageable commute, and a space you can maintain financially. Whether it’s a condo, townhouse, or cozy single-family home, the best starter home is one that helps you start building stability and confidence as a homeowner while sticking within a reasonable budget.

    Is there such a thing as a starter home anymore?
    Starter homes still exist, they just look a little different in today’s market. Inventory availability and rising prices have redefined what a starter home looks like to include smaller homes, fixer-uppers, and even condos or townhomes. While the definition of a starter home has evolved, the idea of starting small and building equity over time is still very much alive.

    How long do people typically stay in a starter home?
    Many homeowners are extending their stay in their starter home for around 5-10 years, but there’s no hard and fast rule. Some people move sooner as their needs or situations change, and others stay longer and might even turn their first home into their forever one. What’s important is that your starter home helps you grow both personally and financially in a way that supports your next steps.

    Ashley Cotter

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  • What is Contingent vs. Pending? Find Out the Difference

    Key takeaways

    • Contingent homes mean the seller has accepted an offer, but they’re still active listings.
    • Pending homes are no longer active listings and are in the process of being sold.
    • Contingencies are specific conditions that must be met during a real estate transaction. If they aren’t met, then a buyer or seller is legally allowed to back out of the deal.

    When looking at homes for sale, you’ll often see listings labeled as “contingent” or “pending.” In this Redfin article, we’ll explain what those terms mean and how they impact your chances of buying the home. Whether you’re looking for a condo in Miami, FL, or a home in Minneapolis, MN, here’s what you should know about contingent vs. pending listings. 

    What does contingent mean in real estate?

    A contingent property means the seller has accepted an offer, but the deal depends on meeting certain conditions, like inspections or financing. It remains an active listing since the sale can still fall through. If all contingencies are satisfied, the sale moves to pending.

    What are common contingencies in real estate?

    Real estate contingencies can be based on a number of factors. Some of the more common contingencies when buying a house include:

    • Financing contingency: If a buyer can’t get financing, the seller can opt out.
    • Appraisal contingency: If an appraisal reveals that the home is worth less than the offer, the buyer can request a lower price or opt out.
    • Inspection contingency: If a home inspection reveals problems, the buyer can request repairs, compensation, or opt out.
    • Title contingency: If a title report reveals a conflicting ownership status, the buyer can opt out.
    • Home sale contingency: If a buyer cannot sell their current home within the agreed-upon timeline, the buyer may opt out. 

    6 common types of contingency statuses

    When a home is contingent, there are several statuses that have different meanings. Here’s what they are:

    1. Contingent – continue to show (CCS): A listing may say “contingent – continue to show (CCS)” which means that agents can continue to show the home. The buyer may have several contingencies they need to fulfill. In this case, the sellers may be actively accepting additional offers, so speak with your agent about the best course of action. 
    2. Contingent – no show: If a listing says “contingent – no show,” it means the home is no longer being shown or accepting offers. While there are contingencies, the seller is confident that the offer will likely go through. 
    3. Contingent – kick-out clause: A kick-out clause means that a buyer must fulfill their contingencies by a certain date or risk losing out on the home. For example, if the buyer cannot sell their current home in time to pay, the seller can opt out.
    4. Contingent – first right: If the buyer cannot match additional offers made on the contingent house, the seller can opt out.
    5. Contingent – short sale: A short sale is when the home is sold for less money than what is owed on the mortgage. Typically, short sales are initiated by the bank or mortgage company and can take months to complete. “Contingent – short sale” means that an offer has been accepted and is in the process of a short sale.
    6. Contingent – probate: If a listing says “contingent – probate,” that means the home is being sold due to the owner’s death. Probate is the legal process of reviewing a deceased person’s assets and Will to determine their distribution. 

    What does pending mean in real estate?

    A pending property means the seller has accepted an offer, and all contingencies are met or waived. It’s no longer an active listing and remains pending until closing, when all legal and financial requirements are finalized.

    4 common pending types in real estate

    There are a few different kinds of pending sales in real estate. The more common types include:

    1. Pending – taking backups: The seller accepted an offer on their home, but something hit a snag in the final stages, such as an issue with a contingency on the offer. Now, the seller is taking backup offers in case their deal falls through.
    2. Pending – no-show: If a home is “pending – no-show” or “pending – do not show,” that means the seller is no longer showing the property. It’s likely they’re confident that the sale will go through.
    3. Pending – short sale: The accepted offer is a short sale and must be approved by additional lenders or banks outside of the buyer or seller’s control, which may take a long period of time to process.
    4. Pending – more than 4 months: This means the accepted offer has been pending for more than four months. This can be due to snagged negotiations, delayed construction, or longer-than-usual processing time. In some cases, it may be agent oversight in updating the listing status from pending to sold.

    Can you make an offer on a contingent or pending home?

    Yes, you can. A real estate agent with experience in complex deals can help you navigate the process. If you really want to buy a home that’s listed as contingent or pending, you’ll need a well-informed strategy. Here are some things to consider:

    • Have your agent speak with the listing agent: Your agent should be able to find out the current state of the contracted offer. How do the buyer and seller feel about the deal? Does the current contract entertain backup offers? Depending on what your agent learns, they can give insight about potentially submitting an offer.
    • Make a strong, competitive offer upfront: Submit your best offer early, ideally above the asking price if the market is competitive. A larger earnest money deposit and fewer contingencies (while still protecting yourself) can also make your offer more appealing.
    • Act fast and be flexible: Tour the home as soon as it hits the market and submit an offer quickly. Flexibility on the seller’s preferred closing timeline or move-out date can give you an edge over other buyers.

    FAQs about contingent vs. pending offers

    How often do contingent offers fall through?

    It’s uncommon. While it’s hard to track how many contingent or pending offers fall through each year, the National Association of REALTORS® shows that around 5 percent of overall home sales fail. That means the vast majority of sales close, but deals can fall apart for many different reasons.

    Is pending the same as sold?

    Pending is not the same as sold. It means that the seller has signed a contract with the buyer for the home sale, but the sale isn’t final yet.

    Can a seller back out of a contingent offer?

    It depends. Generally, a seller can’t back out unless the buyer fails to meet a contingency deadline or another clause allows it. For example, the seller may have a financial contingency and is willing to accept a backup offer if the buyer doesn’t meet the deadline to secure funding. In that case, the backup buyer may end up purchasing the home. 

    Should you look at contingent homes?

    Again, it depends. If you’re set on making an offer on the home, speak with your real estate agent. Your agent may have more insight as to the home’s status and whether the sellers are accepting backup offers. 

    Alison Bentley

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  • Is It a Buyer’s or Seller’s Market?

    The U.S. housing market finally favors homebuyers, but few can afford it

    It’s a buyer’s market, meaning buyers have the upper hand. Following the pandemic-fueled seller’s market in 2021, sellers now outnumber buyers by over 500,000 due to two years of rising mortgage rates and prices. 

    Affordability remains the sticking point for everyone, though: Most buyers can’t afford a home, which is leading to fewer sales, deterring sellers, and slowing down an already sluggish housing market. You can see this in the data: Over the past six months, prices have risen while demand has dropped – almost the opposite of typical spring and summer buying seasons.

    So, where do we go from here? Here’s what to know about buyer’s vs seller’s markets, how to tell which market you’re in, and where each side has the most leverage right now.

    What is a buyer’s market vs seller’s market? 

    Buyer’s market 

    A buyer’s market typically happens when there are more homes for sale than buyers to purchase them. When this is the case, buyers usually drive negotiations and are more likely to receive concessions. 

    Home price growth is typically lower in buyer’s markets than seller’s markets. But if a buyer’s market sees prices cool substantially, the pendulum may swing back toward sellers as more homebuyers come off the bench

    Seller’s market

    A seller’s market often occurs when demand exceeds supply. Buyers outnumber sellers, creating more competition and fueling bidding wars. Sellers typically lead negotiations and see homes sell for above asking. House prices also tend to rise more quickly and sell faster in seller’s markets.

    >> Read: Disadvantages of Sellers Paying Closing Costs

    The strongest buyer’s markets in 2025

    Sellers outnumber buyers by the most in these ten metros, giving buyers more leverage. Redfin defined a “buyer’s market” as one where sellers outnumbered buyers by at least 10%.

     

    The Sun Belt – cities stretching from the Southeast to the Southwest – is home to all of the nation’s strongest buyer’s markets. 

    Florida and Texas in particular saw a surge in homebuilding during the pandemic, but many of these homes are now sitting unsold as buyers back off. Florida’s housing inventory reached its highest level on record this year. Demand has dropped quickly due to rising prices, climate risks, and high insurance costs.

    The strongest seller’s markets in 2025

    In a handful of metros, buyers still outnumber sellers, giving sellers the edge. Redfin defined a “seller’s market” as one where the buyers outnumbered sellers by at least 10%, and only five metros made the cut.

     

    The Midwest and Northeast are home to the remaining seller’s markets. New construction has lagged here, and with more people looking to move to the region for homes they can afford, supply is falling far short of what’s needed and pushing prices up.

    What buyers should do right now

    • If you’re buying in a buyer’s market: This is the ideal time for buyers to make a move, if they can afford to. Home prices may decline, listings stay on the market longer, and sellers are more likely to negotiate. You may see price reductions, seller concessions, or repairs included to close the deal. With less competition, buyers have more leverage to secure a home at a better price.
    • If you’re buying in a seller’s market: Sellers hold the upper hand, and competition among buyers can be fierce. Homes often sell quickly and attract multiple offers, which can drive prices well above asking. If you’re buying in a seller’s market, be prepared to act fast and make strong offers; trying to negotiate too aggressively could cost you the home.

    >> Read: Is Now a Good Time to Buy a House?

    What sellers should do right now

    • If you’re selling in a buyer’s market: Selling becomes more challenging when inventory is high and demand is low. Homes tend to sit on the market longer – in fact, the average home today takes over 40 days to sell, and nearly half have sat for 60+ days. To attract buyers, sellers should price competitively and remain flexible.
    • If you’re selling in a seller’s market: This is a great time to sell. Homes typically move quickly, and competition among buyers can lead to multiple offers, bidding wars, or offers above asking price. With high-demand and limited inventory, sellers have the upper hand and are more likely to get favorable terms, including waived contingencies and minimal concessions.

    >> Read: Should I Sell My House Now? 

    How to tell if you’re in a buyer’s or seller’s market

    Even if the national housing market favors buyers or sellers, individual cities and regions usually vary widely. Sometimes, even adjacent neighborhoods will have completely different trends. That’s why it’s important to do your research to understand which way your market leans. Here are a few ways to do that.

    Check the Redfin Data Center

    Redfin publishes its buyers vs sellers dynamics research to the Redfin Data Center for public viewing. On the dashboard, you can see whether the national housing market – and any of the 50 largest metros – leans toward buyers or sellers. This is a good way to get a baseline picture of the housing market, but it may not reflect your neighborhood or include your city. That’s where additional research and insight comes in.

    Talk with a local agent

    Local real estate agents know the market the best. They have up-to-date knowledge on how long homes are sitting on the market, whether sellers are cutting prices, and how competitive offers are. An experienced agent can tell you if buyers have the upper hand or if sellers are still in control, and help you make informed decisions in your neighborhood.

    Research housing inventory

    A common way to gauge which way a market leans is to look at “months of supply” – the number of months it would take for available inventory to sell at the current rate. Supply below 4 months tends to favor sellers, while supply above 5 months tends to favor buyers. Redfin publishes this data on the Redfin Data Center for every city and metropolitan area in the country.

    Track sale price trends

    Price growth often accelerates during a seller’s market and cools during a buyer’s market, sometimes even causing home prices to fall. If prices are growing and show no signs of slowing down, you could be in a seller’s market.

    Look at mortgage rates

    Mortgage rates play a huge role in the housing market. Typically, the higher the rates, the less buyers shop for homes, making sellers more desperate for offers. This is the case today, which is putting buyers in the driver’s seat.

    Looking forward

    Economic uncertainty continues to throw a wrench into the housing market, with a weak job market, tariffs, and immigration policy all playing a role. Homebuilding is also more expensive than ever, putting pressure on the nation’s ailing housing stock. 

    But there are positives on the horizon. In part because housing costs are so high and so few homes are selling, price growth has slowed – and in some places, they’re falling. Plus, mortgage rates have dropped to recent lows, which may help bring life back to the housing market. 

    The prolonged seller’s market is over, so serious buyers with the budget may want to act now while competition is low.

    Methodology

    Based on a September 2025 Redfin report. All data covers the period of August 2025 and is seasonally adjusted, dating back to 2013. Please see this article for the full methodology.

    Jamie Forbes

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  • Inspection for Informational Purposes Only: What It Means For Buyers and Sellers

    The clause “inspection for informational purposes only” became popular in the competitive housing market during the pandemic. You may have seen it in an offer, or even used it yourself. While the term sounds simple, buyers and sellers don’t always agree on what it means once the purchase and sale agreement is signed.

    An inspection for informational purposes only means the home inspection is for the buyer’s knowledge only, and won’t be used to negotiate over every minor issue. But the rules can vary by state, and misunderstandings can lead to conflicts during the sale.

    Here’s what you need to know to navigate negotiations and set realistic expectations, whether you’re buying a home in Boston, MA, or selling in Los Angeles, CA.

    What does “inspection for informational purposes only” mean?

    An inspection for informational purposes only, sometimes called an “informational inspection” or “info-only inspection”, is a clause that allows buyers to complete a home inspection while:

    • Agreeing not to request repairs or price reductions: Sometimes additional terms are added in case major work surfaces, like not requesting or negotiating repairs under $5,000.
    • Releasing the seller from any obligation to fix issues: While sellers aren’t (usually) required to fix anything that comes up during the inspection, an informational inspection reduces the risk of negotiations or unexpected costs for the seller.
    • Retaining the buyer’s right to walk away (depending on the contract): If the offer is accepted as an information only inspection, and maintains the inspection contingency, buyers can still walk away after the inspection. If an inspection for informational purposes only is combined with a waived inspection contingency, the buyer is likely locked into the contract.

    The original purpose of the clause allowed for the buyer to gain knowledge about a home’s condition without creating additional negotiation hurdles for the seller, an especially powerful move when combined with a waived inspection contingency in a competitive market. But depending on where the transaction is taking place, the phrase can hold different meanings.

    What this looks like in practice

    You’ve found your dream home in Kansas City, MO’s hot housing market. To make a strong offer, you waive the inspection contingency but retain the right to an informational inspection—showing the seller you’re serious and unlikely to back out.

    The inspection report uncovers $15,000 worth of electrical and plumbing updates. Normally, a buyer might try to negotiate with the seller to cover some of these costs, but with this type of offer in a competitive market, you’re committed or risk losing your earnest money. You move forward toward closing, knowing you had $20,000 budgeted for unexpected repairs.

    What an inspection for informational purposes means in your state

    Here’s where things can get murky: an inspection for informational purposes only doesn’t hold the same weight everywhere. Real estate contracts are written differently in every state, and the local market culture also plays a big role. While the phrase is common across the country, each state’s standard real estate forms handle it a little differently.

    • Massachusetts – Common in competitive Boston markets. Buyers usually won’t request repairs, but most contracts still allow withdrawal for major issues. “Informational only” doesn’t guarantee the buyer will stay.
    • New Jersey – Buyers may have an inspection contingency period. Even with an informational inspection, they can usually walk away if serious defects are found. Fewer repair requests, but no total certainty for sellers.
    • Delaware – Contracts prevent repair or credit requests, but buyers can terminate if uncomfortable with findings. Balances seller stability with buyer protection.
    • Virginia – Informational inspections often prohibit renegotiation, though buyers may retain a right to terminate for major issues. Legal guidance is recommended.
    • California – Buyer-protective agreements mean buyers can often cancel during the inspection period, even with an informational-only clause. Sellers should note it may carry less weight.
    • Illinois – Common in Chicago-area competitive offers. Buyers typically cannot demand repairs, but attorney review periods may allow withdrawal. Clarifying timelines is key.
    • Texas – The TREC contract allows buyers to terminate for nearly any reason during the option period, so informational inspections are less restrictive.
    • Florida – “As-is with right to inspect” provisions let buyers inspect without obligating repairs. Buyers can still cancel during the inspection period.

    Pros and cons of an informational inspection

    When possible, an inspection paired with a home inspection contingency is the gold standard for buyers. But when you need your offer to stand out, an inspection for informational purposes only can be what pushes your offer to the top — and convince sellers that you are serious about the home.

    Benefits for buyers

    • Instead of completely waiving the inspection, you still get knowledge of the home’s condition before buying. This reduces the risk of going in blind to a home purchase.
    • Depending on your state and contract, it might still be possible to walk away from a home if the inspection report reveals issues.

    Benefits for sellers

    • An info-only inspection reduces the risk of buyers coming back to negotiate. Less negotiation usually means a faster path to closing.
    • In a hot market, buyers with this clause are likely to be more serious about the deal.

    Risks for buyers

    • You lose your negotiation power — and it’s likely sellers have back-up offers waiting if you don’t like what was found on the inspection report.
    • If you also waived the inspection contingency, you could inherit expensive repairs.
    • The contract could remove your right to walk away after the inspection and lose your earnest money.

    Risks for sellers

    • Buyers could still try to negotiate if big repairs, like foundation problems, are uncovered.
    • If the buyer does walk away based on what was found in the report, any major defects might need to be disclosed to the next buyer.
    • Depending on the contract terms, the buyer might still be able to walk away without consequence after the inspection.

    Bottom line

    While an inspection for informational purposes has its advantages, both sides should understand the trade-offs of this approach. Buyers will come in with a stronger offer but have less leverage to negotiate. For sellers, it can mean a cleaner transaction, but it’s still not a guarantee the deal will go through. Understanding what an inspection for informational purposes only means can help set the right expectations — ideally creating a smoother path to closing for both parties.

    FAQs about inspection for informational purposes only

    Can I still cancel the contract after an informational inspection?
    It depends on your state and contract. In many states, yes, you can cancel, but you can’t renegotiate. But if an informational inspection is combined with a waived inspection contingency, it will be more difficult to walk away without losing your earnest money.

    Is an informational inspection the same as waiving an inspection?
    No. Waiving an inspection means no inspection at all. An informational inspection means you get a home inspection but agree not to request repairs or negotiate once you get the report.

    Do sellers have to disclose issues found in an informational inspection?
    Yes, in many states. Once a seller becomes aware of a major defect, they may be legally obligated to disclose it to future buyers.

    Should buyers always get at least an informational inspection?
    Yes. Even if you’re competing in a hot market, knowledge of a home’s condition is critical before committing to close.

    Ashley Cotter

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  • Who Pays the Real Estate Agent Commission?

    Who Pays the Real Estate Agent Commission?

    Are you buying or selling a home? Then you might be wondering: “Who pays the real estate agent?” Traditionally, this cost has been shouldered by the seller, but recent changes have brought new dynamics into play. 

    The National Association of Realtors (NAR) and Multiple Listing Service (MLS) have implemented new rules about how real estate agents communicate about real estate fees. These changes went into effect on August 17th, 2024, and are intended to provide greater transparency and competition around fees. 

    In this Redfin article, you’ll learn everything you need to know about who pays the real estate agent, agent commissions, and the recent changes affecting them. 

    What is a real estate commission?

    A real estate commission is a payment the homebuyer or seller makes to their agent(s) for their services in helping them purchase or sell a home. The commission is often a percentage of the final home sale price and is exchanged during the final transaction at closing. 

    Who pays the real estate agent?

    Sellers have historically paid both the buyer and seller’s agent fees from the proceeds of the sale. But as of August 17, 2024, buyers will now agree to their agent’s fee in writing before touring. Buyers can still ask the seller to cover the buyer’s agent fee when they make an offer. 

    Because of this change, the amount the seller has to pay a buyer’s agent varies from buyer to buyer. Redfin expects that sellers will continue to cover the buyer’s agent commission fee in many transactions, but increasingly, these fees will be negotiated as part of the offer. 

    Here are two options for how a seller might navigate the new commission process: 

    • The seller can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
    • Sellers can proactively offer a commission or a concession that the buyer could use to pay their agent as part of their home’s marketing strategy. They can still communicate this to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing.

    Why would a seller pay the buyer’s agent commission?

    Whether to offer any buyer agent commission, or how much, is part of an overall marketing strategy geared towards attracting buyers and achieving the sellers’ goals. 

    Instead of authorizing their agent to advertise a selling office commission (which must now be off the MLS in most markets), a seller may choose to offer the buyer a concession that the buyer can choose to use as they see fit. Or, they could instruct their agent to tell the buyer that they’re open to offers. That then puts the ball in the buyer’s court to decide if they want to request any concessions from the seller, or if they want to pay their agent directly.

    How did the NAR settlement affect agent commissions?

    Prior to the NAR settlement, the commission amount that the seller was willing to provide was advertised in the MLS, so that buyer agents would know in advance what a seller was offering to them if they brought a buyer for that listing. Some MLSs required that the listing make an offer of commission to buyers’ agents. Commissions were always negotiable, but were rarely negotiated in practice. Following the settlement, we’re seeing an increase in how often commissions are negotiated. 

    The NAR settlement also established rules designed to help make real estate fees more transparent and competitive. For example, agents must now provide a written agreement to homebuyers that explains their fees before touring. These agreements must also include a statement that all commissions are fully negotiable. 

    Some brokerages now require a full buyer agency agreement that requires the customer to commit to that agent exclusively before touring. Redfin does not. Redfin believes that we should earn a customer’s business. This is why Redfin discloses our fee upfront, but does not require a customer to exclusively commit to us in order to tour a home. 

    Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home. 

    Can you negotiate real estate agent commissions?

    Yes, you can negotiate real estate agent commissions. Commissions are not set by law and are fully negotiable. The commission rates many brokerages charge often vary from area to area, and there are no laws or industry rules that set commission rates.

    How is Redfin different when it comes to commissions? 

    At Redfin, we’ve always believed that consumers should get the best deal. That’s why we charge sellers a listing fee as low as 1%.* 

    Our fees when serving buyers vary by market, but are competitive because we know they could make the difference in your winning or losing an offer. All things equal, a seller will prioritize the offer that is asking them to pay a lower buyer agent fee. 

    We also offer additional savings for buyers who make a commitment to hire us after the first tour. With our Sign & Save program, if you commit to hiring your Redfin agent before the second tour, we’ll reduce our fee by 0.25%. We earn customers’ business by providing the best service and value.

    Final thoughts

    The real estate commission landscape has shifted, offering more transparency and flexibility for buyers and sellers – goals that Redfin has always supported. Whether you’re searching for your dream home or looking to relocate, understanding these new rules can help you make smarter decisions and potentially save money in the process. 

    You can learn more about the NAR settlement here, and how Redfin has embraced this change and always championed better deals for the customer here. You can also connect with a Redfin agent to learn everything you need to know – regardless if you’re buying or selling. 

    The NAR settlement primarily applies to listings on an MLS, and MLS rules may vary. Rules regarding listings not on an MLS also vary widely from state to state. Talk to your agent to learn more. 

    *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.

    Jamie Forbes

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  • Real Estate Commission Changes: What You Need to Know

    Real Estate Commission Changes: What You Need to Know

    There are important changes happening in the real estate industry this month. The National Association of Realtors and multiple listing service (MLS) have implemented new rules about how real estate agents communicate about real estate fees. The changes provide greater transparency and competition around fees—goals that Redfin has always supported. 

    We know this can be confusing, but Redfin agents are prepared to answer any questions you have and expertly guide you through your buying and selling journey. 

    So, what is changing exactly?

    It has been customary in most transactions for the home seller to pay a commission to both their agent (the listing agent) and the agent who represents the buyer (the buyer’s agent). While it has always been the seller’s choice to decide whether and how much compensation to offer the buyer’s agent, the process around it has changed in two main ways:

    1. Disclosure of buyer’s agent fees: A buyer will now need to agree to their agent’s fees before touring homes. This sets the maximum amount that your buyer agent will be paid when you purchase a home. 
    2. Advertising of buyer’s agent fee: Offers of buyer agent compensation are being removed from many MLSs, the databases agents use to share and market listings. A seller can still pay the buyer’s agent, but they cannot advertise any offers of compensation in the MLS unless expressly allowed by local rules.  As a result, buyer’s agent fees will increasingly be negotiated as part of the offer.

    What does this mean for sellers?

    Sellers will still have conversations with their listing agents about any compensation they would like to offer to the buyer’s agent. We expect that in many cases, buyers will continue to ask sellers to help cover the buyer’s agent fee as part of their offer. Sellers will evaluate offers and negotiate, like they would with any other terms. 

    What does this mean for buyers?

    As a buyer, you will have an upfront conversation to learn what your agent will charge. Your agent will ask you to sign an agreement about their fee before touring homes.  You can still ask the seller to cover your agent’s fee as part of your offer. Depending on how you structure your offer, the seller could agree to compensate your agent directly or could offer closing concessions that you could allocate to pay your agent at closing. 

    As a buyer, why do I need to sign an agreement so early in the process? I just want to tour a home and I’m not ready to commit to paying an agent.

    The new industry-wide rules require a written agreement that explains the agent’s fees before touring. Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home. Different brokerages have different approaches and policies. Redfin’s approach is transparent and gives buyers flexibility. 

    Is Redfin requiring a buyer agency agreement to tour?

    Unless your state has other requirements, Redfin is adding a simple fee agreement for the buyer to sign when you request a tour with a Redfin agent that discloses the fee we would expect to collect at closing. Many sellers will cover this fee for you at closing. 

    This fee agreement does not lock you in to working with a Redfin agent. Once you’ve had a chance to meet your agent in person, your agent will ask you to commit to working with Redfin. Buyers who commit to working with Redfin before the second tour will get a discount of 0.25% off our fee. 

    What are Redfin’s fees for buyer services?

    Redfin’s buyer fees vary by market. We’ve set our pricing to give our buyers a competitive edge, offering a discount of 0.25% off our fee if you commit to Redfin before the second tour. By reducing our fee by 0.25%, we can make your offer more attractive to a seller. Just like the offer price and contingencies, a seller will compare how much in buyer agent fees each offer is requesting and factor that into their decision. 

    What if the seller doesn’t agree to pay my agent? Am I responsible for paying my agent out of pocket?

    Many buyers are using all of their financial resources for their downpayment and don’t have extra cash to pay agent fees. So far, most sellers understand this and are often willing to cover the buyer’s agent fee from the proceeds of their sale. If the seller doesn’t agree to pay your agent or only agrees to pay a portion of the buyer’s agent fee, you can amend your offer, agree to pay your agent directly at closing, or walk away. In any case, before signing a contract to purchase a home, you’ll be aware of the associated costs so that you can make an informed decision. 

    It’s important to have a good relationship with your mortgage lender, who can help you structure your offer in a way that fits your financial situation. Redfin’s mortgage partner, Bay Equity, has loan officers at the ready to guide you through this process.*

    When I sell my home, do I have to pay a buyer agent commission? Should I offer one?

    A seller has always had the ability to decide how much, if any, compensation to pay the buyer’s agent. As a seller, you have options: 

    • You can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
    • Or, you can proactively offer a commission or a concession that the buyer could use to pay their agent as part of your home’s marketing strategy. This can still be communicated to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing. Whether or not to offer a commission, and how much, can be dependent on various factors your Redfin agent can help you with.

    How do I know what is a fair price for a buyer’s agent?

    Buying a home is a huge commitment; you should focus on finding the best agent at the best rate. Redfin agents have significant experience and we publish their sales and customer reviews online so you can see for yourself. The average Redfin agent sold more than three times the number of homes as the typical agent at other major brokerages. And we’ve set our prices to be as competitive as possible. Connect with an agent to learn more.

    *Bay Equity Home Loans is affiliated with Redfin. You don’t have to work with a Redfin Agent to use Bay Equity’s services. For additional information, please read our Affiliated Business Disclosure.

    Jamie Forbes

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  • Mortgage Rates Just Hit a 14-Month Low: Is Now a Good Time to Buy a House?

    Mortgage Rates Just Hit a 14-Month Low: Is Now a Good Time to Buy a House?

    Key takeaways:

    • If you want to beat the competition, now is a great time to buy a house.
    • Daily average mortgage rates hit a 14-month low of 6.34% on Monday, giving buyers thousands of dollars in buying power.
    • Don’t wait to buy; buyers who were scared off by high rates are poised to enter the market, which may boost prices.
    • Total listings are also up 20% over last year, so there’s plenty of inventory to choose from.

    On Monday, August 5th, daily average 30-year fixed mortgage rates plunged to 6.34%, their lowest level since April 2023. Other loan products fell to the high-5% to mid-6% range. This came as a result of a surprisingly weak jobs report that bred fears of a looming recession and triggered a global market cooldown. 

    Following the flurry of events, rates ticked up to 6.52% on August 6th – above Monday’s lows but well below the 7.5% peak in April. In fact, homebuyers today have gained nearly $30,000 (around $200 per month) in purchasing power since just the beginning of July. Many experts now predict the Fed to start cutting interest rates more than anticipated in September, which may push down mortgage rates more. 

    Total listings are also up 20% compared to last year, as more sellers enter the field. The market seems poised to give buyers a break. So, if you’re considering buying, you might be wondering “should I buy a house now or wait?” 

    Is now a good time to buy a house? 

    The short answer: Yes, if you have the means, it’s a good time to buy a house before the market catches up. Waiting for rates to fall further leaves you at risk for increased competition among buyers and subsequent price hikes from sellers. 

    Buying a house now means you’re also maximizing your investment potential. Lower rates save you money over your loan term and mean more of your mortgage payments can go towards building equity. 

    It’s worth noting that the market has been topsy-turvy recently, though. For example, higher mortgage rates typically push house prices down, but they have had the opposite effect over the past two years. Also, declining inventory typically leads to more competition, but prices have been too high for many buyers to afford, causing some homes to sit unsold and others to sell in a few days.

    Additionally, economists aren’t entirely sure what will happen with mortgage rates in the coming months, and housing prices are still near a record high. This week started with good news, but it’s important to be prepared for any surprises that may come. 

    Will mortgage rates fall further in 2024?

    Today’s mortgage rates reflect what investors think the Fed will do. Investors believe the Fed is done limiting inflation and expect a gradual decline in mortgage rates through the end of the year. 

    In other words, economists don’t expect mortgage rates to drop significantly more than they already have, because today’s rates already price in expected interest rate cuts in September.

    How did we get here? 

    In the past decade, there has been a severe shortage of homes. This is part of what caused the housing boom in 2021-2022; too many buyers were fighting for a tight supply of homes, leading to skyrocketing prices. Record-low mortgage rates also fueled the frenzy. (Low supply was partly due to a chronic underbuilding of homes since the 1980s.) 

    However, in 2023 and 2024, as construction rebounded and inventory began slowly recovering, prices kept rising even as mortgage rates remained high. Higher rates typically cause a drop in demand and prices. However, this didn’t happen, because many homeowners had pandemic-era rates and were unwilling to give them up, creating a further shortage of homes for sale. 

    This was a unique trend that continues today – the national median sale price hit a record high in June and many people are still avoiding the market altogether. Those who are buying are often doing so in affordable places like Texas and Upstate New York. Even though inventory is rising and sales are low nationwide, house prices are at record highs and show little signs of falling. 

    However, the recent dip in mortgage rates has given homebuyers a burst of hope.

    Home sellers should get ready for competition 

    Recent drops in mortgage rates sets the stage for more buyers entering the market, meaning more competition for listings. 

    This is because house hunters scared off by high mortgage rates have been waiting on the sidelines for years, especially as inventory flagged due to sellers wanting to hold on to their pandemic-era rates (the lock-in effect). Now that rates are dropping, more buyers will decide that they have the budget to buy a house. 

    Should you lock in your mortgage rate today? 

    If you have the means, now is a great time to lock in a low mortgage rate. Rates haven’t been this low in more than a year. 

    Lower rates mean you can qualify for a larger loan amount or enjoy lower payments within your current budget. If rates still feel too high, you can buy down your mortgage rate, too. 

    All-cash buyers hoping to avoid mortgages altogether should also act now to avoid probable price hikes as rates continue to drop. 

    Final thoughts

    If you’re in the market for a house and have been scared off by high rates, now is a great time to connect with an agent and start your home search. Rates are expected to continue trending slowly downwards, and the market is gaining momentum. The longer you wait, the more competition you’ll see.

    Jamie Forbes

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