An example to show sellers how we’ll protect their home’s value.
We’re in an insane environment where interest rates continue to increase and buyer sentiment keeps getting worse. So when interviewing sellers, we need to offer as many tools as possible to protect the value of their properties. Guild Mortgage helped me put together an example of how we can use $13,000 of the sellers’ proceeds to protect $68,000 of their homes’ values, and you can create a similar demonstration for your sellers.
In the example, we have a $950,000 purchase price, an interest rate of 4.625%, and 20% down—that gives us a monthly payment of $3,900. If we remove $13,000 from the purchase price and keep the rate the same, that reduces the down payment by about $2,700 and saves us $55 per month on this mortgage payment.
However, if we go a step further and use that $13,000 to buy down the interest rate, you save much more. If we take that 4.625% interest rate, we can use $13,000 to buy it down to 4%. Then the down payment stays the same, but the monthly payment falls by $278 per month, making it $3,600 instead. So, keeping the monthly payment at $3,600 with 20% down, this same buyer now only has to pay $881,000, therefore saving them $68,000.
That’s how $13,000 can protect $68,000 in value. So if you’re interviewing a seller to get their listing, you can tell them that if interest rates keep squeezing buyers’ purchasing power and we get a financed offer below asking price, we can counter them up and say we’ll use that money to buy down their interest rate. This is an excellent tool to show sellers different ways that we can get their homes sold.
Feel free to call or email me if you have questions about this or any other real estate-related matter. I would love to speak with you.