When selling your home, the goal is to walk away with as much money in your pocket as possible after the sale is complete.
Your real estate agent will typically offer you a couple of strategies for making this possible. Usually, the first strategy is to list the home for the highest possible price and see if anyone will pay it. But if your initial sales price is not attracting buyers to your home, a Realtor unfamiliar with seller buydowns will often start reducing the price after a few weeks to try to draw more attention to the listing.
The biggest problem with this strategy is that now every buyer scouring the internet can see that you’re already reducing your sales price. Magically, offers from buyers start coming in— but now even lower than you ever wanted to go.
The second strategy is to list the home below market price to attract buyers immediately. More buyers competing against each other should, theoretically, drive up the sales price. Sure, this strategy can work in specific markets, but it is never guaranteed you will get enough buyers competing so you can sell the home for the best possible price. And once you’ve listed it at a certain price point, suddenly increasing that number to where you really wanted it to be just won’t be possible.
A much smarter way to sell your home for more exists, and taking advantage of it is as simple as finding the right Agent with whom to work.
This leads us to the third and far better way to structure the final sales price that will allow you to sell your home for the highest price by helping the buyer get the payment they want.
A buyer using an interest rate reduction strategy can afford to pay a higher price for your home because you are going to help them qualify for a below-market interest rate.
Understandably so, buyers care mostly about their mortgage payment— and you care primarily about net proceeds from the sale. An interest rate reduction strategy helps both of you get what is most important to you.
A Realtor unfamiliar with seller buydowns will typically recommend that you keep lowering the sales price until buyers stop making below-asking price offers, while an experienced Realtor will use a counteroffer to make the buyer an offer that they cannot refuse, and you feel great about.
There are many ways you can use an interest rate reduction strategy to your advantage. For example, let’s say a buyer offers you $30,000 below what your asking price is. We can assume that the buyer is making an offer at this price because that’s the payment that they can afford.
Instead of lowering your sales price, you can offer credit from your proceeds to permanently reduce their interest rate and payments. Essentially, what you are doing with your counteroffer is telling the buyer, “I’ll help you get the payment you want if you help me get the sales price that I want.” That’s called a win/win negotiation.