The Power of Rate Reduction- Lower the Rate not the Price

Don't reduce the price. Lower the Rate instead.

With a full shift in power from seller's market to buyer's market , both sellers and buyers need to reevaluate the approach to the transaction. The examples below illustrate how a simple seller credit can increase the number of prospects able to qualify for a listing and how it can produce significant savings for the buyer as well as helping to stabilze home values in a neighborhood.

Take a listing with a $450,000 Sales Price with a 20% down payment would have a loan amount of $360,000 at 6.5% that would be a payment $2275.44 per month and would require a monthly income of $5057 per month to qualify. Lets take that same listing and assume a price reduction of $13,500. That would make the new loan $349,200 assuming the same 20% down payment. The new payment would be $2207.00 and drops the income to qaulify to $4904.85 ($68.26 LESS). With a rate reduction (NOT a Temporary BUYDOWN) you would keep the sale price $450,000 and use a $13,500 seller credit to buy the rate down to 5.5%. This would drop the payment to $2044.00 per month this is $163.00 less a month in payment. And it drops the income to qualify to $4542.31. Which means there are a lot more folks could you show this property too. In addition the points are tax deductable. This really is a WIN-WIN FOR ALL PARTIES INVOVLED.

If you would like any more information about this or other sales stratigies please feel free to use me as a resource.