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!