SELLER BUYDOWNS
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A much better alternative to a price reduction is often a very generous seller-financed interest rate buydown.
ORIGINAL PRICE AT
Current market rate (“no points”)
$2,500,000
Price
25%
Down
$1,875,000
Loan
3.625%
No points rate
EST. TOTAL PAYMENT
$11,360
REDUCED PRICE AT
Current market rate (“no points”)
$2,500,000
Price
25%
Down
$1,875,000
Loan
3.625%
No points rate
EST. TOTAL PAYMENT
$10,910
$450 LOWER
How BuyerEdge Works
I will use a $2.5 million listing in our local market as an example, as the agent just reduced the price by $100,000 to $2.4 million.
Today’s “no points” interest rate for a strong borrower purchasing that property for $2.5 million with 25% down would be 3.625%.
But, if the seller credits 3 points to the buyer to buy down the interest rate, the buyer would instead get a 2.875% interest rate.
The 3 point credit would cost the seller $56,250 and the buyer’s monthly payment would end up $770 LOWER than it would be at 3.625% (today’s “no points” rate).
In contrast, if the buyer buys the house for $2.4 million (with no seller credit for a rate buydown) at today’s market rate of 3.625%, his payment would $320 HIGHER than it would be at the higher price with the rate buydown.
JVM’s BuyerEdge Program benefits everyone.
Buyers
- Lower interest rate
- Lower monthly payments
Sellers
- No decrease in list price
- Fast closings
Agents
- Get your clients more money
- Maintain higher commissions
Want to take advantage of JVM’s BuyerEdge Program?
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