top of page
  • Writer's pictureKate Fulford

The Big Shift: Seller Buy Downs

Updated: Feb 20

I'm sure you feel the shift in the market - even if you're not in the game of buying or selling. The Portland real estate market has been RED hot for the last few years and some of you may have experienced the dreaded multiple offer situations (as a buyer). You may have heard of homes selling for tens of thousands over list price. And you may have been freaked out about all this (or thoroughly delighted as a seller!).

However, those days seem to be over for now. The rapidly accelerated home values over the last few years coupled with the rising interest rates, have made Portland pretty darn expensive and buyers are less inclined (or able) to buy. This is good though -because the market is feeling more balanced, less hectic, more sane. It's like we finally have a chance to breathe. Now buyers can look at a house and take the time to think about it. Maybe visit again? Before, there was an offer deadline and it was inevitably tomorrow and holy crap - they already have 10 offers?? The stress of this situation is real.

I'm not saying that we've completely moved away from multiple offers (in fact, recent clients got out bid on two homes!) - but it is a kinder, gentler market.

For sellers, you may have noticed the price drops. The halcyon days for making an extra $50K off your bungalow seems to be over (for now).

We know that buyers are going to pay more for their homes (high interest rates) and sellers are not going to get the crazy cash from their sale. So what's the silver lining?

Seller Buy Down

Here's a strategy that you may not have heard of: Seller Buy Down.

In a nut shell, this means that instead of lowering the price of a home that's been sitting, a seller could offer to buy down the interest rate for a buyer.

Let's look at a scenario, provided by an awesome lender I've worked with.

Let's say a person wants to obtain a 30-year home loan for $500,000.00. They have an interest rate of 5% which makes their monthly payment $2,684.11 which is out of their budget. If the sellers had reduced the price and the loan amount was changed to $490,000 their payment would be $2,630.43 saving them $53.68 per month off their payment.

What If instead of reducing the price by $10,000 the sellers kept it at $500,000 and offered a credit of $5,000 to buy the interest rate down? In this example, $5,000 got the interest rate to 4.5% (cost will vary) which makes buyer’s payment $2,533.43. This is a savings of $150.68 per month!

Remember, it’s always important to discuss with your real estate agent or mortgage loan officer the potential benefits and effects of a seller paid closing cost.

40 views0 comments
bottom of page