Home Seller Tool For 2019
We have experienced seven years of multiple offers and short supplies of housing inventory in Orange County. This year, 2019, will be a little different with much more inventory. We need to pull out the old bag of tricks again. Here is a description of a “Seller Buy Down” and how it helps both the buyer lower payments and the seller get more net from the sale. Loan Officer Kevin Budde explains below.
A buyer wants to keep his monthly principal & interest payment under $4,500. He makes an offer $75,000 lower than the asking price of $1,250,000 because the 80% loan on a sales price of $1,175,000 is $940,000. At 4.00%, the principal & interest payment is $4,487.
$1,250,000 – $75,000 = $1,175,000 x 80% = $940,000 @ 4.00% = $4,487 P&I
The seller counters at full price but offers to pay 2 points on the buyer’s new loan to buy the interest rate down one-half percent. The principal & interest payment is now under $4,500 the buyer wants on the 80% loan of $1,000,000.
$1,250,000 x 80% = $1,000,000 @ 3.5% = $4,490 P&I
The seller is able to get the price he needs, the buyer is able to get the payment he needs and the seller nets $55,000 more.
$75,000 price reduction versus a $20,000 point buy down cost saves $55,000
Using seller credits towards interest rate buy downs for buyers creates win-win transactions for both parties.
If I can assist you with specific calculations on your next offer please let me know, I’m happy to help you.
Kevin Budde 949-422-2075
Experience Counts – Call Ron Buck at Keller Williams Realty in Laguna Niguel bre#01364665
949-456-0505 or RonBuckGroup@gmail.com