How can I sell a home for the most money?: Interest rate buy down

In any market no matter how good the deal is on a home it can be made better. In our last blog we explained incentives that help make a home sale look sweeter, one of those was buying down the interest rate. Here we are going to elaborate on what that means and how it can help you sell for the most money. Imagine there are two homes competing against each other for the home buyers offer. One house has an upgraded kitchen, a fenced yard, and is priced at $300,000. The other house has original kitchen, no fence and is priced at $295,000. Well the seller on the first house is not offering an interest rate buy down, and the home buyer can only afford a $1,800 per month payment, they want to buy this home, but they have to offer $285,000 and ask for closing costs and get a 6.5% mortgage with 5% down for it to pencil out. Well then we have the seller of the second house who is offering a 1% interest rate buy down, and full closing costs. The home buyers choose house two because it makes more financial sense, they can make a full price offer with 5% down, and get a 5.5% interest rate and thier payment is $1,500 well under what they can afford. They will be able to upgrade the home themselves, and fence the property. . Take $7,000 for the closing costs, $5,000 for the rate buy down, and the seller nets $283,000 with a full price offer (Remember, no upgrades, no fenced yard either). The seller of the first house is offered $285,000 and pays $7,000 in closing costs this is a net of $278,000. You see that a one point interest rate buy down can affect your net by $5,000. This is not a perfectly accurate scenario, but close and you should consult your local Real estate professional for help on this.