Lennar sells as many as 80,000 homes per year – so they have a bit of experience when it comes to moving homes.
And – in their most recent earnings report, they said they’d all but be out of business but for rate buydowns.
OK…what they actually said was that buyers are very responsive to rate buydowns.
And the reason is that rates are still just way too high for most buyers, as the average interest rate is still north of 7.0%.
Buyers Have Never Been This Rate-Sensitive!
Buyers are in fact more rate-sensitive than ever before.
I watched a recent interview with Redfin’s CEO where he explained how potential buyers now track interest rates in real time and respond almost immediately with more offers when rates fall (something Redfin.com picks up in its data).
This is something we see too at JVM, and it has been very confusing – as we have never seen a market where purchase volume is so immediately influenced by interest rate changes.
The good news is that this means that we can all expect buyers to swarm back into the market if there is a large rate drop.
The bad news is that rates remain too high and are thus keeping swarms of buyers on the sidelines.
So – that is why I am again suggesting that agents and sellers push temporary buydowns, as a “4.875% Interest Rate” is very enticing to rate-sensitive buyers.
Buydown Rates Are Very Enticing and Cheaper Than Price Cuts
And yes, sellers have to pay for them in most cases (lenders can help too), but a $10,000 to $20,000 buydown cost is a lot cheaper than a $25,000 to $50,000 price reduction (which is why builders offer buydowns).
Here, once again, are a few blogs, where I explain how temporary buydowns work:
The Beauty of Buydowns To Lower Payments and Save Deals!
3-2-1 Buydowns Are Not the New Option ARM!
And – equally important, we love to help agents and sellers market temporary buydowns for their listings and can provide rate buydown flyers that illustrate the savings to potential buyers.
Get Your 4.875% Rate Today! See? It’s pretty enticing…
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