In today’s market with higher home prices and rates a little creativity provides an affordable solution to bring buyers and sellers together. Here is a true story:
On Monday our buyer was seeking to make an offer on a $550K home in Beaverton using his VA loan eligibility. The property had been on the market for a couple of months and undergone several price reductions.
THE BUYER
The buyer asked to see a loan scenario showing payment and closing costs. The payment came in at $3,665. He needed a payment of $3,500 to make the deal work.
THE REALTOR
His realtor asked what kind of price reduction it would take to drop the payment by approximately $200. Answer (column 3 in the chart below), it would take a $35K price reduction to drop the payment by $197/mo. resulting in a payment of $3,467/month. Knowing there would be pushback to another large price reduction, we got creative.
THE DEAL
We proposed an interest rate buy down. This is a one-time fee of 1.5% discount points ($8,250 on a $550K purchase) that would lower the buyer’s rate from 5.25% to 4.625% for the life of the loan.
The seller paid the 1.5% discount points amounting to $8,250 as a concession rather than taking a $35,000 price reduction.
We had an accepted offer on Tuesday AM and both buyer and seller are very happy!
Note: Rates and terms reflected here pertain specifically to this transaction in mid-August 2022 and are for reference only. The above is not an offer and all parties must be eligible based on their own qualifications.
by Steve Landis for The Landis Group
