Trish Reedy

CEO/Broker | NMLS: 304737

Have a Listing that's gone Quiet? Considering a Price Reduction?

Are you debating a PRICE REDUCTION? Take a look at a few different scenarios! ***Base example: $500K Listing Price. Potential buyer 5% down payment*** Mortgage amount $475K @ 7.50%
Should we Lower the Price? 
Offer a Buyer Concession? 
What are our Options?

***Base example: $500K Listing Price. Potential buyer 5% down payment***

Mortgage amount $475K @ 7.50%


1. Offering a $10K reduction in price:

Buyer goes from borrowing $475K, to borrowing $465,500.

Their down payment moves from $25K to $24,500

Their payment goes down by $66.43/m

Not bad, not great, but there is better!



2. Keeping sales price as is and offering a 

$10K seller concession:

Now buyer can elect to spend $10K less of their money. Win!

Instead of spending less, they can elect to keep their contribution the same, and use the $10K credit to buy their rate down permanently.

Buying their rate from 7.50% to 6.875% using the seller’s $10K concession, the payment would go down by $200.86/m

Now we’re making it bit more attractive to buyers!!



3. Keeping the sales price the same and offering a $10K seller concession in the form of a 2/1 buydown:

Here’s how this works:

Year one, the interest rate and payment will be 2% less than the base rate.

That saves a buyer $624.27/m!!!

Year two, their interest rate and payment will be 1% less than the base rate.

That saves a buyer $318.95/m!!!

Year three, their interest rate reverts back to the base of 7.50%


Here’s the best part! If the buyer refinances before benefiting entirely from the $10K buydown, the excess becomes a principal reduction during the refi process!!!


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.
Trish Reedy picture
Trish Reedy picture

Trish Reedy

CEO/Broker

Planted Local Lending | NMLS: 304737

Getting started is Quick & Easy

If you have any questions, I’m here for you

purchase

refinance