Seller Incentive Idea- Rate Buydown

Rates are super low but there are always those buyers out there waiting for rates to drop even further. As a seller it can be frustrating to see buyers on the fence. So I have come up with one suggestion that just might pull some buyers off the fence.

What about a temporary rate buy-down?  A seller can offer the buyer a temporary rate reduction, saving the buyer money over the next, say, 2 years, for a relatively small up front cost to the seller.  The seller agrees to a 2-1 buy-down and signs a buy-down agreement at closing, basically the sellers is buying down the rate 2 points in year 1 and 1 point in year 2. 

Here’s an example: 

*Purchase price of $245,000

*Loan Amount of $220,000

*30 year fixed rate at 5.250%

Year 1- rate of 3.25%  for a savings of $257/month and $3,095 annually

year 2- rate 4.25% for a savings of $132/month and $1,594 annually

years 3-30- rate is back at 5.25%

so your total savings for the buyer and cost for the seller is $4690

For less than $5000 the seller can offer the buyer a dramatic savings over the next 2 years for the buyer.  This is just one idea for a way to encourage buyers to stop waiting for rates to get even more fantastic and just take the plunge.  Want more ideas for seller incentives?  Give me a call, I’d be happy to help!

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