We are here at the very end of December and the herd of buyers for our properties are not out in full force.
However, as a seller we should never let that discourage us. Instead what we want to do is think how can we make our property so attractive to a potential buyer that they would focus their attention on the purchase of your house. Besides the obvious, like curb appeal, a clean and well done finished project, and staging; let’s think about the long-term benefits that we can create for our would-be buyers.
I will share a live example. I have a property that is just about ready to go to market for sale. This particular property is in a part of town where the inventory tends to sit for a while, especially if you are above the $300,000 price point. It’s an entry-level community. Now, my subject property is well above that price; however, there is a buyer for every house.
My strategy to help build momentum and to accelerate the sale of this property will be to help the buyer with an interest rate buy down. The stock market is volatile and the mortgage interest rates continue to increase. Unfortunately, when this happens a buyer can afford less due to the increase in their mortgage payment. Most agents will respond with a request for a price reduction but with an interest rate buy down we can still obtain our higher price and the buyer also gets a lower monthly payment. It’s a true win-win solution.
Per my mortgage strategist, we can only go to whatever the lending guidelines allow which typically tend to be anywhere between 3% to 6% of the purchase price depending on the loan program. In this example, the strategy would be to sell my property at the higher price and contribute towards the buy down of my buyers’ interest rate which will be a permanent benefit for the life of their loan. So in this example, my cost would be about $6,700 so that the buyer could achieve an affordable payment versus a drop in price of about $23,905. In this example, I keep about $17,205 more and the buyer still has the same mortgage payment. Another strategy would be to pay for your buyers’ nonrecurring closing costs.
The bottom line is there are many ways to make your property more attractive to your buyer. I’ve included a screenshot showing an example of my property that will be coming to the market with the seller rate buy down scenario. If the graph doesn’t make full sense, don’t worry as what matters most is that you get to keep more money in your pocket and the buyer will see there’s a benefit in choosing your property over others at the higher price.
By the way, this strategy can be used anywhere in the country.
To your success,
Ernie “Creating Win-Win Solutions” Vargas
P.S. If you’d like to explore loan options with my lender, she’s always available for a consult. Just let me know.
P.P.S. By the way, I help my coaching and mastermind students come up with creative solutions to save their deals.
P.P.P.S. Here’s a screenshot of the buy down versus price reduction.