Low monthly payments are selling homes.
Car dealers notoriously focus on monthly payments when selling cars because payments often influence buyers more than price.
But that hasn’t been the case with homes, where buyers have traditionally focused on rates and price.
In today’s rate environment, though, we’re seeing a stronger focus on monthly payments than ever before.
Sidebar: Tale Of Two Markets
This blog doesn’t apply to low-supply and/or AI-impacted markets like Oakland, Berkeley, and San Francisco (where we see listings go for more than $1 million over asking).
AI buyers, flush with millions, don’t give two hoots about payments, and sellers in those markets would scoff at any request for a credit.
Those sellers care only about speed and closing certainty (which is why we’re offering 12-day jumbo closes).
What Sellers Should Offer To Sell Homes
Sellers in slower markets should tout low monthly payments through finance flyers showcasing any of the following products:
- Interest-Only loans
- ARMs – and especially our crazy low-rate FHA 5/1 ARM!
- Lender-Paid Temporary Buydowns
- Seller-Paid Temporary Buydowns
I beat this dead horse often, but we are seeing low monthly payments move listings time and again (compared directly to nearby listings without low-payment marketing).
Difference Between Lender-Paid And Seller-Paid Temporary Buydowns
To be clear, seller-paid buydowns are always better than lender-paid.
And I have nothing against lender-paid buydowns, as we probably do them more than any other lender of our size.
But lender-paid buydowns always come with higher rates than seller-paid buydowns.
This is because lenders need to increase the rate anywhere from 1/4% to 1/2% to get enough extra commission/rebate to cover the buydown cost.
When sellers pay for buydowns, there is no rate increase; rates are simply bought down from the market rate of the day.
This is why we can offer seller-paid 3-2-1 buydowns (and 2-1 FHA buydowns) with rates starting in the 4% range – and low payments indeed.
