Here’s a great way to sell your home faster! – this can make the difference for your borrower to qualify to purchase your property!! These are the kind of strategies we need to be utilizing in today’s market to close deals.
IDEA: A seller buy down can save a buyer money and benefit the seller and neighborhood as well
THE CHALLENGE: A sellers home had been on the market for 7 months. The original sale price was $650,000. The seller had already reduced the purchase price 3 months ago by $30,000 to a new sale price of $620,000 and was getting ready to reduce the price by another $20,000.
THE SOLUTION: By applying the buy down rather than another price reduction, the Realtor was able to sell the home quickly. In this type of scenario, everybody wins. The seller sold the house without a price reduction, the agent made a higher commission; and the buyers payments were lower per month, which allowed them to afford a home they might not have been able to afford otherwise.
EXAMPLE: (30 Yr Fixed Loan with 10% Down Payment)
NO Seller Buy down: $600,000 purchase price (reduced by $20,000 from the $620,000 Sale Price) $540,000 Loan amount No Seller Concessions ($0.00) Rate = 6.875% Payment = $3,547/Mo
Seller Buy down: $620,000 Sale Price $558,000 Loan amount 3%* Seller Concessions ($20,000 to buy down the rate) Buy down rate to 5.75.% Payment = $3,257/Mo
*Bonus: Buyer gets the discount points credit paid by seller ($20,000 towards their taxes this year!!)
*Payment is $290.00 less than the NO seller buy down payment – this can make the difference between a borrower qualifying or not qualifying!
* Max seller concession will depend on CLTV and lender loan program.
WHO BENEFITS? (Everybody does!!!)
Seller: Lowers his tax basis and sells the house. The sellers house is now $290.00 less per month than its comparable peers for sale in the neighborhood-this separates the property from its peers! Buyer: Reduced mortgage payments from seller buy down and gets the tax deduction from the points paid by the seller!
Realtor: Earns the commission from helping solve solution for buyer or seller Neighborhood: Keep the “value” up higher in the neighborhood
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