The call I took Tuesday was about a house in Ocean County that had been listed for eleven weeks. The investor had already talked himself out of it twice. His question wasn't whether the numbers worked — he'd run them, they worked — it was whether he was the idiot still buying while everyone smarter had gone to cash.
He'd read the survey. So had I.
Here's the thing nobody told him: the seller had already dropped the price once and was sitting on nine weeks of nothing. That is not a market telling you to stay home. That is a market handing you the only thing that has been genuinely scarce for four years, which is leverage at the table. The question worth spending an hour on isn't whether to use it. It's what to spend it on — and most investors spend it on the wrong thing.
The Number Everyone Read
The Summer 2026 RCN Capital / CJ Patrick Company Investor Sentiment Survey, published August 5, 2026, found that only 26% of real estate investors believe market conditions are better than a year ago — the lowest share on record. The survey's Investor Sentiment Index fell to an all-time low score of 84. Forty-five percent of investors said market conditions have gotten worse over the past twelve months, the highest share in the survey's history.
Thirty-two percent of investors surveyed plan to make no purchases at all in 2026. That's the headline everyone quoted, and it's the one worth reading carefully, because it comes with a detail the coverage skipped: 32% is down from 34% in the Spring 2026 edition. The sidelined third didn't just leave. They've been sitting out all year, and slightly fewer of them are sitting out now than three months ago.
So the honest version isn't "a third of investors just quit." It's that roughly a third of your competition has been out of the bidding for months, and the mood among the ones still standing has never been worse on record. For a buyer, those are two different facts and only one of them is about you.
A third of the bidders being gone isn't the risk. It's the terms.
What the Leverage Is Actually Worth
This part is measurable, and it's the part that should drive your August.
Sellers gave concessions in 46.2% of U.S. home sales in the three months ending May 31, 2026, up from 43.1% a year earlier — the highest share for that period since Redfin began tracking in 2019. That's from Redfin's report published June 22, 2026. Roughly 16% of those sales — 15.7% — included both a seller concession and a price drop, also a record for the period. The driver Redfin names is straightforward: there are 47% more home sellers than buyers in the United States right now.
Note Redfin's definition, because the whole argument below turns on it. A concession is a credit that reduces the buyer's total cost — repairs, closing costs, or a mortgage rate buydown. It explicitly excludes list-price reductions. Those are counted separately. Keep that distinction; it comes back in a minute.
The listing data says the same thing from the other direction. Realtor.com's July 2026 housing report, published August 3, 2026, put the national median list price at $428,950, down 2.4% year over year — the ninth consecutive month of annual declines. Twenty percent of listings took a price reduction, and the typical home spent 57 days on market. Pending sales were still up 1.3% year over year, an eighth straight month of growth. Demand hasn't collapsed. Sellers have started adjusting.
The part that doesn't travel
Now the caveat that belongs in the middle of this section rather than a footnote at the bottom, because a New Jersey investor who skips it will make a bad offer.
The concession wave is heavily Sun Belt. Redfin's metro numbers: Nashville 75.5%, Charlotte 71.4%, Atlanta 68.7%. And at the other end, New York came in at 2.9%, the lowest in the analysis, with San Jose at 5.9%.
North Jersey trades in that New York orbit. If you walk into a Bergen County listing quoting a national 46% and expecting the seller's agent to blink, you're going to have a short conversation. Inventory here is still tight enough that sellers hold most of the cards in a lot of towns.
Two honest readings follow from that. The national numbers describe a menu — they tell you the leverage is real if you're willing to buy where it exists, which for a lot of my clients means out of state. And the mechanics in the next two sections work anywhere a seller is motivated, whether that's a Nashville builder with standing inventory or one tired landlord in Sussex County who's been on market since May. Fifty-seven days and a prior price cut is the tell, and that tell exists in every zip code.
Why the Pessimists Aren't Wrong
I'm not going to pretend the third that stopped buying is stupid. Their reasons are in the same survey, and some of them are better than the reasons people give for buying.
Insurance is the big one. Seventy-one percent of surveyed investors said home insurance premiums and coverage factor into their investment decisions, and half of all respondents said they missed out on a purchase or a sale because of home insurance market issues. That is not a rounding error. That is the single most concrete deal-killer in the data, and it's the one you can actually do something about — more on that below.
Then there's the strange one. Sixty percent of investors now expect home prices to rise, up from 52% in the prior survey — a reversal after three quarters of declining expectations. Read that next to a record-low sentiment index and you get the actual mood: people expect prices to go up and feel worse than they ever have. That's what it looks like when investors think they're getting squeezed from both ends, priced out on entry while carrying costs stay high.
And Realtor.com's economists flagged August as the test. If price reductions accelerate while pending sales weaken and sellers start pulling listings, that combination stops reading like a buyer's window and starts reading like a downturn. That's a real scenario, not a hedge.
So the stance here is narrow on purpose. This is a case for disciplined buying with leverage, not for catching a falling knife. Three pieces of discipline, and the first one is free:
- Get the insurance quote before you make the offer, not after inspection. It's the number one stated deal-killer in the survey and it is the easiest one to eliminate. An hour of work moves it from a surprise into an input.
- Underwrite the rents that exist, on a current 1007, not the rent you think the unit gets after you paint it.
- Walk from any deal that only pencils with the concession. If the credit is the difference between yes and no, the answer was no.
The Concession Most Investors Ask For Wrong
Here's where the money is, and it's structural.
Layer 1: the conventional cap is smaller than you think
Fannie Mae's Selling Guide B3-4.1-02, Interested Party Contributions, caps financing concessions on an investment property at 2% of the lesser of the sale price or appraised value — regardless of down payment. Not 3%, not 6%, not the 9% you may remember. Those tiers are for primary residences, where the cap runs 3%, 6%, or 9% depending on your LTV band. Investment property gets 2%, flat, whether you're putting down 20% or 40%.
Anything above the cap doesn't just get ignored. It's reclassified as a sales concession and deducted from the value used to calculate your loan.
Run that on a real number. Purchase price $300,000, seller offers a $12,000 credit, conventional investor financing at 75% LTV:
- Cap is 2% of $300,000 = $6,000
- Excess = $6,000
- Value used for LTV becomes $300,000 − $6,000 = $294,000
- 75% of $294,000 = $220,500, instead of 75% of $300,000 = $225,000
The generous seller just cost you $4,500 of loan proceeds. You bring more cash to closing, not less. That's the trap: a motivated seller offering 4% on conventional investor financing isn't helping the buyer, they're shrinking the buyer's loan.
Layer 2: DSCR is non-QM, so the cap is the lender's call
DSCR loans don't run on the agency guide. The concession cap is set by the lender, which means it can be — and on our program is — considerably larger.
Our DSCR program allows seller concessions up to 6% of the purchase price. On that same $300,000 house, that's $18,000 of room versus the agency's $6,000. The full $12,000 fits with $6,000 to spare.
That's worth sitting with. The same seller motivation that conventional financing structurally cannot absorb, a DSCR file usually can. It's one more reason the product fits this particular market moment, sitting alongside the qualification and entity advantages you already know from the complete DSCR guide and the head-to-head against conventional financing. Caps vary by lender and by program, so confirm your number in writing before it goes into a contract — but don't assume you're stuck at 2% because that's the number you've always heard.
Why the seller says yes to this and no to a price cut
Back to Redfin's definition: a concession does not reduce the recorded sale price.
That is the entire reason sellers prefer it. The price cut shows up in the comp. It shows up in the appraisal on the house two doors down, and in what the seller's neighbor can ask in October. The credit doesn't — it's a line on the settlement statement.
So the seller who will not take $288,000 will frequently write a $12,000 credit at $300,000. Same money out of their pocket, very different public record. Your job is not to talk them out of that preference. Your job is to know what to do with the credit once you have it.
The Worked Example: $12,000, Two Ways
Same seller motivation. Same house. Two structures.
Driving assumptions
| Input | Value |
|---|---|
| Asking price | $300,000 |
| Gross market rent (1007-supported) | $2,400/mo |
| Taxes + insurance | $500/mo |
| Down payment | 25% |
| Seller motivation on the table | $12,000 (4% of price) |
| Par 30-yr fixed DSCR rate | 6.875% |
| Buydown schedule | 1 point = 25bp, 3 points max |
Two notes before the math. That $12,000 is 4% of the price — double the conventional investor cap, and comfortably inside our 6% DSCR cap. And the $500 for taxes and insurance is illustrative and deliberately state-agnostic; on a New Jersey deal that line is usually the number that decides everything, and it needs to come off the actual assessment and an actual insurance quote.
DSCR below is gross rent ÷ PITIA, which is standard underwriting and matches the convention in the rent-growth post. It is not the vacancy-and-management-haircut convention used in DSCR Ratio Explained — that post applies a 5% vacancy and 8% management deduction first, so its ratios read lower on the same deal. Pick one convention and stay in it.
Path A — take it as a price cut
- Price: $288,000
- 25% down: $72,000
- Loan: $216,000 at 6.875%
- P&I: $1,418.97
- PITIA: $1,418.97 + $500 = $1,918.97
- DSCR = $2,400 ÷ $1,918.97 = 1.2507
Path B — take it as a credit
The $12,000 credit deploys as the maximum 3 points plus closing-cost help:
- Price: $300,000
- 25% down: $75,000
- Loan: $225,000
- 3 points on $225,000 = $6,750, buying 75bp → rate 6.125%
- Remaining credit toward closing costs: $5,250
- P&I: $1,367.12
- PITIA: $1,367.12 + $500 = $1,867.12
- DSCR = $2,400 ÷ $1,867.12 = 1.2854
What that actually shows
1. Path B has the lower payment and the stronger DSCR — on a higher price and a bigger loan. Path B carries $9,000 more debt and still pays $51.84 a month less. The number the lender underwrites got better while the number on the deed went up. That's the whole trick.
2. Path B is also cheaper at the closing table. Path A brings $72,000 down and pays its own closing costs. Path B brings $75,000 down but applies a $5,250 credit against those same costs — net $69,750. Path B is $2,250 less cash out of pocket. One caveat that matters: a closing-cost credit can only offset costs that exist. You cannot take cash back at closing, so if your actual closing costs come in under $5,250, the remainder is wasted. On a $225,000 DSCR loan with origination, title, appraisal, legal, and escrows, that's rarely the binding constraint — but check it rather than assume it.
3. The tier argument is real but thinner than it looks here. At 1.2854, Path B clears a 1.25 pricing step with genuine daylight. Path A clears it too — at 1.2507. Hold that number up to the light. Path A's entire cushion above 1.25 is $1.03 a month of taxes and insurance. A single dollar on the insurance quote drops it into a worse pricing tier. Path B absorbs $52.88 a month of the same bad news before it slips. So the finding isn't "Path B crosses the tier and Path A doesn't." It's that Path A crosses it by an amount too small to survive contact with a real insurance binder, and Path B crosses it with room. And if your lender's grid steps at 1.30 instead of 1.25, neither one gets there and this entire point is worth nothing. Ask where your grid steps before you build a structure around it.
4. The standard objection to buying points does not apply here. If you paid the $6,750 for those 3 points, the break-even math is the usual discouraging story: the same $225,000 loan at par 6.875% carries P&I of $1,478.09, so the buydown saves $110.97 a month and takes $6,750 ÷ $110.97 ≈ 61 months — just over five years — to repay. That's the calculation that talks most investors out of points, and it's correct. It's also irrelevant when the seller writes the check. There is no payback period on money that was never yours. Every month from the first one is savings.
5. The honest cost of Path B. Path A's advantage is permanent and Path B's is not. Path A leaves you with a $216,000 balance instead of $225,000 — $9,000 less debt for the life of the hold, and more equity from day one if the appraisal comes in at $300,000. Path B's rate advantage lives entirely inside the loan. Refinance or sell, and the 6.125% dies with the note — while a prepayment penalty may bind at exactly the moment you want out, which is its own trap covered in the prepayment penalty trade.
When Each One Wins
The rule falls out of finding 5, and it's about your exit, not your rate view.
Take the price cut when your hold is short or your exit is a refinance. If you're buying to renovate and pull capital back out — the BRRRR path — you will refinance out of this note inside two years. A buydown you hold for 20 months is $2,200 of benefit against $6,750 of seller money you could have taken as a permanently smaller loan. Take the basis. Same answer if a cash-out refinance is already in the plan.
Take the buydown when the hold is open-ended. A rental you intend to own in eight years is a rental where the buydown compounds — $110.97 a month for 96 months is over $10,600 on $6,750 of someone else's money, and the stronger going-in DSCR may improve your pricing on top of it.
And if the deal doesn't clear coverage either way, the structure isn't the problem. That's a different conversation, and sometimes the answer is a no-ratio DSCR loan, and sometimes the answer is that it's not a deal.
What To Do This Month
- Get the insurance quote before you write the offer. Half the investors surveyed lost a transaction to the insurance market. This is the cheapest hour you'll spend on any deal.
- Ask the listing agent directly what the seller will do on concessions versus price. Frame it as two options, not one ask. Fifty-seven days on market and a prior price reduction are the tells, and both are public.
- Confirm the concession cap with your lender before it goes in the contract. An over-cap credit gets clawed back into the price calculation and shrinks your loan. Getting this wrong costs more than getting nothing.
- Run both deployment paths on any live deal before you sign. The answer changes with your hold period, and it changes with where your lender's pricing grid steps.
FAQ
How much can a seller contribute on a DSCR loan? More than on conventional financing. Our DSCR program allows seller concessions up to 6% of the purchase price. Fannie Mae's Selling Guide B3-4.1-02 caps interested party contributions on an investment property at 2% of the lesser of sale price or appraised value, regardless of down payment. On a $300,000 purchase that is $18,000 versus $6,000. DSCR loans are non-QM, so the cap is set by the lender rather than by agency guidelines — confirm the number with your lender before you write a concession into the contract, because it varies by program.
Do seller concessions lower my purchase price? No, and that is precisely why sellers agree to them. Redfin's definition explicitly excludes list-price reductions: a concession is a credit that reduces the buyer's total cost through repairs, closing costs, or a mortgage rate buydown, while the recorded sale price stays where it is. A seller who will not cut $12,000 off the price will often write a $12,000 credit, because the credit protects the comp that their neighbors and their appraiser will read next month.
Is a seller-paid rate buydown better than a price cut? It depends on how long you plan to hold. On the traced $300,000 deal in this post, taking $12,000 as a credit produces a lower payment, a stronger DSCR of 1.29 versus 1.25, and $2,250 less cash at the table than taking it as a price cut — on a higher recorded price. But the buydown's advantage evaporates the day you refinance or sell, while the price cut's smaller loan balance is permanent. Short hold or a near-term BRRRR refinance, take the price cut. Long hold, take the buydown.
Why are seller concessions at record highs in 2026? Because there are 47% more home sellers than buyers in the United States, according to Redfin's June 22, 2026 report. Sellers gave concessions in 46.2% of U.S. home sales in the three months ending May 31, 2026, up from 43.1% a year earlier and the highest share for that period since Redfin began tracking in 2019.
What happens if a seller offers more than my loan's concession cap? The excess is reclassified as a sales concession and deducted from the value used to calculate your loan, which shrinks the loan rather than helping you. On a $300,000 conventional investment purchase with a $12,000 credit, $6,000 exceeds the 2% cap, so the value for LTV becomes $294,000 and a 75% loan drops from $225,000 to $220,500. You would need $4,500 more cash at closing, not less. Confirm the cap before the concession goes into the contract, not after.
Does a bigger seller concession mean I should pay a higher price? Only if the deal underwrites at the higher price. The appraisal still has to support it, and a higher recorded price means a larger loan balance you carry for the life of the hold. The test is not whether the concession feels like free money — it is whether the property pencils at the contract price with the concession stripped out entirely. If the deal only works because of the credit, that is not a window, that is a stretch.
Should I be buying at all if a third of investors have stopped? Only with underwriting discipline that does not depend on the concession. The Summer 2026 RCN Capital Investor Sentiment Survey found 32% of investors plan no purchases in 2026 — but that is down from 34% in the spring, so the sidelined third is not newly larger. What changed is the mood around them, with the sentiment index at an all-time low of 84. Get the insurance quote before you offer, underwrite current rents rather than projected ones, and walk from any deal that only clears with the credit.
Price the Deal
The third of investors sitting this out will read the same survey next quarter, and the quarter after that. Sentiment is a description of how people feel about a market. It is not a description of the terms available in it, and right now those two things are pointing in opposite directions.
You can rough out both paths yourself with the DSCR calculator. But when you've got an actual address, send me the numbers — price, rent, taxes, insurance, and what the seller has signaled — and I'll run both structures and tell you which one your hold period argues for, including exactly how much concession the file can absorb before it starts working against you. Send the numbers here.
Dominick Prevete — 31 years in real estate finance. Founder, National Loan Provider. 25 Main Street, Unit B, Sparta NJ. (908) 220-6404.
Investor sentiment figures are from the Summer 2026 RCN Capital / CJ Patrick Company Investor Sentiment Survey, released August 5, 2026. Concession and metro figures are from Redfin's report published June 22, 2026, covering the three months ending May 31, 2026. List price, price-reduction, days-on-market, and pending-sales figures are from the Realtor.com July 2026 Monthly Housing Trends Report, published August 3, 2026. The 2% investment-property interested party contribution cap is Fannie Mae Selling Guide B3-4.1-02, version dated May 7, 2025. The 6.875% par rate and the one-point-per-25-basis-point buydown schedule are National Loan Provider terms as of August 2026 and are not a rate lock or a commitment; every file prices to its own specifics on the day it is quoted. Concession caps, buydown schedules, and pricing tiers vary by lender and by program. This is market commentary, not a commitment to lend.
Loans are for business purposes only and are not subject to TILA, RESPA, or HOEPA. Not for primary residences. Equal Housing Opportunity. All loans subject to underwriting approval. Rates and terms shown for illustration; actual rates depend on deal specifics. We do not lend to borrowers with credit below 600 or on owner-occupied properties.