Sellers? Cut the price or offer a rate buydowns
In today’s market, a growing number of sellers are opting to do something called a price cut – especially when their house has been on the market for a while without any bites.
According to HousingWire Data as many as 4 in 10 (43%) sellers are going this route – that’s the highest it’s been in 4 years. But what if there’s another (potentially better option) for your bottom line? And it’s just as appealing, if not more so, to today’s buyers?
Enter the rate buydown.
Why Buyers Expect a Deal
First, let’s set the stage on why some compromise may be necessary in today’s market.
In September, Redfin says there were 63% more sellers than buyers in the market. And with so many sellers active and relatively few buyers by comparison, those purchasers are realizing they have more power. And as mortgage rates continue to put a squeeze on their budgets, they’re leaning in and using it.
One of the most common negotiation points? The price.
That’s because they want to feel like they’re getting a deal and they want to see their monthly payment drop. And since buyers can’t control rates, the price feels like the most obvious lever to pull.
But the savviest sellers realize being flexible doesn't always mean a lower price, paying for a buyer's rate buydown might work better.
What Is a Rate Buydown?
A buydown is money paid at closing to lower the buyer's mortgage rate. When you pay it as the seller, you are paying some of the buyer's interest ahead of time, so the buyer gets a lower rate and monthly payment. And that’s especially appealing to today’s buyers.
Temporary buydowns lower the rate for the first few years, then it goes back to the full rate. The more years a buydown covers, the more it costs. These work well for buyers who expect to refinance within a certain amount of time.
A permanent buydown lowers the rate for the whole loan. These are paid for with "discount points." One point costs 1% of the loan. According to FICO, each point generally lowers the rate by about a quarter of a percent. This type of buydown works well for buyers who plan to stay in the home for a long time.
Same Money, Different Results
And here’s why these can be a win-win for both buyers and sellers. Rate buydowns help sellers stand out in a crowded market and they can have a bigger impact on your buyer than a price cut would.
Here’s an example to show you what that could look like.
Let’s say you’re willing to make a $10,000 concession to help get the deal done. Take a look at these three ways to spend that money and the impact they could have on a buyer’s $420,000, 30-year fixed loan at 7%:
It's the same $10,000 from the seller. But a 2-1 buydown saves the buyer about eight times more each month in the first year.
And since most buyers shop by monthly payment, that’s what grabs their attention.
That's what makes a rate buydown worth considering. Instead of reducing your asking price, you may be able to use that same money to have a bigger impact on your buyer’s monthly payments. And depending on what matters most to that buyer, the immediate savings could be more appealing than a price reduction.
The key is working with your agent and the buyer's lender to compare the options and see which one makes the most sense.
Things To Know
Loan programs cap how much a seller can pay toward a buyer's costs.
Money toward buydowns doesn’t limit what else a buyer may ask a seller to pay for. Buyers may still ask for repairs or other concessions.
Putting the buydown offer in your listing lets agents and buyers know it’s an option.
Your agent can run scenarios on buydowns and other costs of selling in advance so you’re prepared when an offer comes in.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Home sellers need to be realistic about local market conditions, which could require price discounts and other incentives to attract buyers.”
And sellers who offer solutions like buydowns can make meaningful impact where home buyers need it most: in their wallets.
Bottom Line
When you're looking for ways to make your house more appealing to buyers, a price reduction isn't your only option. A mortgage rate buydown could help a buyer save more each month, especially in the early years of their loan.
Talk to your agent or a trusted lender which incentives could make the biggest difference for buyers in our market, while still protecting your bottom line.
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Done...What Most Religions Don't Tell You About The Bible
Cary Schmidt's Introduction of Done
Don't Worry About Dying...You Will Live Forever...
It's All About Location, Location, Location!
God gave His only begotten Son Jesus Christ for us to be saved from this sinful world. Time is at Hand and while it is not too late, secure your salvation.
If you don’t know how to secure salvation, this simple easy to follow “ABCs of Salvation” will guide you on how to accept genuinely Jesus Christ as your Lord and personal Savior to secure salvation for you to surely go to Heaven.
But before going through the steps you might ask: Why do I need to Secure Salvation? And why do I need to go to heaven? This because:
You might be wealthy but it cannot be exchanged for your soul.
Whatever you have here on earth, they are nothing and there is no forever on Earth.
Kingdom of Heaven is more valuable than anything else.
It is appointed that we will die physicaly and we will be judged (Hebrews 9:27).
You only have two destinations: Heaven or Hell
Hell has no exit and Heaven has only one door – Jesus
So how to secure salvation?
A – ADMIT that you are a Sinner
B – BELIEVE on the Lord Jesus Christ
C – CONFESS with your mouth
D – DEPART from evil
A – ADMIT that you are a Sinner
We all have sinned.
17 For if by one man’s offence death reigned by one; much more they which receive abundance of grace and of the gift of righteousness shall reign in life by one, Jesus Christ.) 18 Therefore as by the offence of one judgment came upon all men to condemnation; even so by the righteousness of one the free gift came upon all men unto justification of life.
19 For as by one man’s disobedience many were made sinners, so by the obedience of one shall many be made righteous.
20 Moreover the law entered, that the offence might abound. But where sin abounded, grace did much more abound:
21That as sin hath reigned unto death, even so might grace reign through righteousness unto eternal life by Jesus Christ our Lord.
And no matter how you try to be good, you will still fail.
For all have sinned, and come short of the glory of God;Romans 3:23 KJV
You are still unclean.
But we are all as an unclean thing, and all our righteousnesses are as filthy rags; and we all do fade as a leaf; and our iniquities, like the wind, have taken us away.Isaiah 64:6 KJV
B – BELIEVE on the Lord Jesus Christ
God gave His only begotten Son Jesus Christ to save us. And through His blood, our sins washed away.
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.John 3:16 KJV
Only by His grace and not by works.
8 For by grace are ye saved through faith; and that not of yourselves: it is the gift of God: 9 Not of works, lest any man should boast. 10 For we are his workmanship, created in Christ Jesus unto good works, which God hath before ordained that we should walk in them.Ephesians 2:8-10 KJV
There is no other way but only through Jesus Christ alone.
Jesus saith unto him, I am the way, the truth, and the life: no man cometh unto the Father, but by me.John 14:6 KJV
God commended His love toward us.
But God commendeth his love toward us, in that, while we were yet sinners, Christ died for us.Romans 5:8 KJV
If we have Jesus Christ living in us, we will live eternally.
He that hath the Son hath life; and he that hath not the Son of God hath not life.1 John 5:12 KJV
In the power of our Lord Jesus Christ.For I verily, as absent in body, but present in spirit, have judged already, as though I were present, concerning him that hath so done this deed, In the name of our Lord Jesus Christ, when ye are gathered together, and my spirit, with the power of our Lord Jesus Christ, To deliver such an one unto Satan for the destruction of the flesh, that the spirit may be saved in the day of the Lord Jesus.1 Corinthians 5:3-5 KJV
By the blood of our Savior Jesus Christ
Not by works of righteousness which we have done, but according to his mercy he saved us, by the washing of regeneration, and renewing of the Holy Ghost; Which he shed on us abundantly through Jesus Christ our Saviour; That being justified by his grace, we should be made heirs according to the hope of eternal life.Titus 3:5-7 KJV
C – CONFESS with your mouth
Now that you accepted that you are a sinner and believe in the Lord Jesus Christ, confess with your mouth your sins and that you believe in Him. Let Him come to you and accept Him as your Lord and personal Savior.
If we confess our sins, he is faithful and just to forgive us our sins, and to cleanse us from all unrighteousness.1 John 1:9 KJV
9 That if thou shalt confess with thy mouth the Lord Jesus, and shalt believe in thine heart that God hath raised him from the dead, thou shalt be saved. 10 For with the heart man believeth unto righteousness; and with the mouth confession is made unto salvation.11 For the scripture saith, Whosoever believeth on him shall not be ashamed. Romans 10:9-11 KJV
Now do the Sinner’s Prayer:
Holy, thoughtful, gracious, and Heavenly Father, I recognize and acknowledge I am a miscreant not deserving of your grace and I ask forgiveness of my sins. I know your son is the truth the light and the way, I give myself freely to His control and welcome him into my heart. I ask you to walk with me and guide me, teach me your way and your truth. Thank you for the gift of your Son’s sacrifice on the cross that I may live. Thank you for your forgiveness and for accepting me as your child. Amen.
Now that you are saved and you have Jesus Christ living in you, you should not stop there. What is next? Follow Him, His words, submit yourself, and don’t forget to
D – DEPART from evil
This is not part of the step to secure salvation but it is a way of proving yourself that you are now truly of Christ. Forget your past and follow Him.
Depart from evil, and do good; seek peace, and pursue it.Psalms 34:14 KJV
Therefore if any man be in Christ, he is a new creature: old things are passed away; behold, all things are become new.2 Corinthians 5:17 KJV
(For he saith, I have heard thee in a time accepted, and in the day of salvation have I succoured thee: behold, now is the accepted time; behold, now is the day of salvation.) 2 Corinthians 6:2 KJV
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This article provides information and opinions but is not meant as investment advice. Skip Geiser LLC, Charles "Skip" Geiser, Plum Tree Real Estate Marketing or Rob Brooks Realty does not assure the accuracy or completeness of the information or opinions presented here. It is important to conduct your own research, due diligence, and seek professional advice before making any investment decisions. Skip Geiser LLC, Charles "Skip" Geiser, Plum Tree Real Estate Marketing or Rob Brooks Realty is not responsible for any loss or damage resulting from relying on the information or opinions in this article
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