What is the Seller Buy Down Strategy?
The beauty of the Seller Buy Down Strategy is its simplicity. It does not involve sophisticated mathematical equations, complicated explanations or a degree in economics to understand.
The Seller Buy Down Strategy is designed to be easy to understand and implement so that both the seller and the buyer can easily see that this truly is one of those rare win-win scenarios where everyone comes out ahead.
How It Works
The Seller Buy Down Strategy works by asking the seller to buy down the interest rate on the buyer’s new home loan in lieu of asking for a purchase price reduction. By buying down the interest rate, the home buyer will see significantly lower payments than if they were to reduce the purchase price.
Here’s a specific example of the benefits of the Seller Buy Down Strategy:
The Uneducated Offer
A seller is offering their home at a list price of $650,000. If a buyer were to make a full price offer with 5% down, this results in a monthly payment of $3,506.10 per month.
The Smarter Offer
Statistically speaking, most buyers will offer 3% below the list price on a property they are interested in. Rather than making a reduced price offer that will likely be overlooked, the educated buyer makes a full price offer and instead asks the seller to buy down their interest rate.
By using the same 3% difference to buy down their interest rate instead of reducing the purchase price, the buyer sees a payment reduction of over $423.01 per month!
A True Win - Win Scenario
A seller would need to reduce the purchase price by almost $79,000, or 12%, to match the monthly payment obtained using the Seller Buy Down Strategy.
Most buyers think of their home loan as separate from their purchase offers. We will show you how a smart buyer works with a smart mortgage company to maximize their purchase dollars to buy more home with less money.
Click Get Rates to get in instant online rate and payment quote along with an online Good Faith Estimate and get your pre-approval set in motion.
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