Creative Strategy: Leverage the 2/1 Buy Down with Seller Credits (Attached)

What is a 2/1 Buy Down?

The 2/1 buy down is a mortgage tool that temporarily reduces the interest rate for the first two years of the loan. Here's how it works:

Year 1: The interest rate is reduced by 2%.
Year 2: The interest rate is reduced by 1%.
Year 3 and beyond: The interest rate returns to the standard agreed-upon rate.

How to Use the 2/1 Buy Down for Seller Credits:

Seller Credits: When a seller offers seller credits, they can help the buyer with closing costs or even buy down the interest rate. This helps make a deal more attractive to a buyer, especially in a market with higher interest rates.
Tool to Attract Buyers: The 2/1 Buy Down Calculator helps you present a clear breakdown of monthly savings for buyers, showing how they can afford a higher-priced home by using the seller credits to reduce their interest rate temporarily.

Script for Presenting the 2/1 Buy Down to Buyers:

Introduce the Benefit:
Explain the 2/1 Buy Down:
Highlight the Seller Credit:
Use the Calculator to Show Savings:

Example of a Calculation:

If the interest rate on a loan is 6.5%, using the 2/1 Buy Down will reduce it to:

Year 1: 4.5%
Year 2: 5.5%
Year 3+: 6.5%

This results in a lower monthly payment for the buyer in the first two years, making it easier for them to afford the home they want.

Seller-Specific Strategy for Negotiation:

Seller Incentives: Encourage sellers to contribute seller credits towards this buy-down instead of reducing the sale price. This helps buyers with monthly payments without necessarily lowering the property’s listed value.
Seller Buy-In: "We’ve seen a lot of sellers gain traction in this market by offering credits for a 2/1 Buy Down because it allows buyers to afford a higher-priced home without feeling burdened by the initial payments."

Closing the Deal:

With this strategy, you can not only afford the house but you also lock in an amazing rate for the next two years while you settle in. Let’s take a look at some homes that might be a good fit for this program!

Outcome:

Using the 2/1 Buy Down with Seller Credits provides a clear benefit to buyers, helping them navigate the market despite higher interest rates. It gives them a short-term relief in monthly payments and a long-term investment in a home. This makes the home more affordable, increases the likelihood of offers, and helps sellers stay competitive.

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