This week I received a flyer from one of the local Flagstaff lenders with whom I work -- another technique for her to drum up business, I thought. Then I took another look. It was really an old technique for selling homes, but maybe one I'd forgotten about.
The strategy, in this marketing pitch, is called Maximum Seller Buy-Down. The details of how this program works aren't really there, nor can I find them on the blog referred in the sales pitch. What I think it means is that the seller pays the buyer's points at closing to reduce the interest rate on the buyer's loan. (I'd appreciate a few comments from our mortgage experts on Active Rain to see if I've got this right.) This can be a win-win because the seller saves money as compared to an equivalent (to the buyer) price reduction, but the buyer gets a lower mortgage interest rate so that the home comes within the buyer's monthly payment affordability range. (Right, mortgage experts?)
I'd don't think that, as the marketing pitch suggests, that this technique alone will "turn around" our market, but isn't it worth pursuing in the interests of our seller clients?
In the current slow market, we've seen more and more offers asking not just for price concessions but also payment of buyer closing costs, and, indeed, for paying points to buy down the buyer's mortgage rate. So, why not turn that to a marketing advantage for the seller - make the offer to all buyers as part of your marketing remarks about the home?
I promise to pursue this possibility with more research off-line tomorrow, but I'll also check back for comments by the Active Rain experts. I don't promise to write much in response because I'm headed on vacation later this week! Yahoo!
Want to buy or sell Flagstaff real estate? Contact my team: Team Heitland at RE/MAX Peak Properties!
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Ann you got it, the buydown is usually cheaper than the price reduction, makes the mortgage payment lower for the buyer allowing them to qualify for more home, and it usually tax deductible for the buyer as well.