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Loan Buy Down or Bulk Purchase Loan Commitments

Two ways to make a sale more attractive without sacrificing price.

 Many Agents and Mortgage brokers are making their sellers aware of an attractive solution to qualifying buyers and offering a tangible incentive that helps make a sale. And make the sale with out eroding price as the only method. With the current fixed rates at their all time lowest how can you make them even lower, have your seller buy down the rate for the buyer. This is one method that works well and allows the selling broker to differentiate this property from others being offered on the same street, same building, in the same price range.

For a point or two paid from the seller proceeds at closing you can arrange: this example a rate starting at 3.5% fixed for year 1, increased to a 4.5% fixed loan for year 2, and becoming permanently fixed at 5.5% for the balance of the 30 years. This is not something new, but with current inventory swelling it may be enough to attract a buyer to your seller's home and complete the sale.

Bulk Buy down, or block money set aside for a project can also be a great tool: If you are a developer and have several properties for sale in one project, you can't chase the market down in price without loosing your shirt. And one discounted property in a project leads to the next and an appraisal that will see a declining shift that will not allow price recovery. But if the developer buys some pre-approved lenders funds to make his sales very attractive (by offering discounted mortgages) he can hold price. This will allow him to sell at least some of the inventory without further discounting, and perhaps stem the tide for the final sales in the project at an increased price.

If you are a seller or developer ask your current mortgage holder about these options. Your bank will have some incentive to help make the sale, especially in the case of the developer.It is far better to have multiple mortgage holders for smaller amounts, and dilute their liability away from one big player.

For those that think I am advocating a return to making bad loans I'm not suggesting the bank give the money away. The Buyers will have to meet all the current qualifications, but will be able to see lower initial payments due to the sellers paid incentives.

 

                       

                                                                                                                                                                              Your-White Mountain New Hampshire real Estate Expert

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5 commentsSteve Loynd • March 20 2009 09:55AM
Loan Buy Down or Bulk Purchase Loan Commitments
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Two ways to make a sale more attractive without sacrificing price. Many Agents and Mortgage brokers are making their sellers aware of an attractive solution to qualifying buyers and offering a tangible incentive that helps make a sale. And make… more