We’ve noticed more price reduction alerts lately and it made us wonder — is there another way to market the listing to get that sold sign in the yard?
One option to make that happen through the use of a temporary buydown. If you recall from earlier this year, it is when a seller provides funds to temporarily buy down the buyer’s interest rate. This provides the buyer with a lower monthly payment for a period of time, typically between 1 to 3 years.
So why could this be better than lowering the price on a listing that hasn’t sold or going to market with a lower starting price? Well, as of right now, we know that:
Interest rates have been steadily climbing and are not predicted to fall until mid-2024.
You are never locked into a loan forever. The ability to refinance once rates retreat should always be part of the conversation.
If we can get the buyer a lower payment and the seller a higher price, it’s a win-win situation.
With a temporary buydown, you’re able to focus on fulfilling the life event rather than timing the market. If we believe rates will retreat in the next 12-24 months, a buydown of 2% on a $400,000 home gives the same monthly payment as a price reduction of over $60,000 but only costs the seller roughly $8,500!
This could be a great opportunity to partner with your Key Mortgage loan officer and offer your buyers and sellers a new strategy to achieve their goals in today’s higher interest rate environment. It can also be part of your value proposition of what you bring to the table and what sets you apart from your competition.
Your Key Mortgage lending partner can provide a holistic review of their options to achieve their next home sale or purchase and illustrate a roadmap to what works best for them. Ready to connect with a Key Mortgage loan officer and introduce them as part of your team? Reach out to a Key Mortgage loan officer today.