Want a Rate in the 3’s?

A great sales tool for your listings is now the 2/1 Interest Rate Buydown in which the buyer’s interest rate for the first year is 2% lower than the long-term rate and their rate for the second year is 1% lower than the long-term rate. For example, the long-term rate from year 3 through year 30 is 5.50%, in the first year their rate would be 3.50% and their rate the second year would be 4.50%.

This helps alleviate some of the PAIN buyers are feeling with higher interest rates and it allows them to “grow” into their monthly payment. And higher rates are one of the top 2 reasons why the number of buyers has dropped and thus the number of showings have dropped too.

Your seller will need to pay the cost for the buydown at closing and the cost is 2.25% of the LOAN AMOUNT, not the sales price. I would offer this to buyers instead of a price reduction to create more demand for your listings and market this through social media, video, open houses, print flyers, etc.

For you as buyer’s agents I would put the cost of the buydown into the seller concessions part of the contract in paragraph 4.2 and then specify in additional provisions that the seller concessions will be used to fund an interest rate buydown for the buyer. Of course, check with your managing broker/owner on this.