Richie Alan Naggar, agent & author  (people first...then business Ran Right Realty )

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Caroline Gerardo
Licensed in 20 states - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Seller is going to pay a huge upfront cost. They hold the sales price but kick back one or two percent of the total loan cost for buyer to get a tiny rate reduction. Rather than show you what the buyer saves for temporary period of time which John answered well, let's talk about when a seller might do this?   Seller has gains over the capital gains rates. Say seller is single the individual doesn't have to pay on the first $250000. However if seller owned for a long period of time a primary residence and they aren't exchanging - basis of house + improvements + $250000=  the amount not taxed. If the "overage" would just go to taxes and they want to get a deal closed ASAP seller might consider giving the buyer $10000- $19000 on a $640000 loan. There are caps on what the seller can give, depending on the loan type the buyer chooses -varies by loan to value and loan type. When the credit starts to exceed $10000 I find the seller balks even though it offsets what they pay to the taxman, the dollar amount sounds too big.  What other situations work? - seller's property not getting much action, is unique, offers candy to buyers? 

Sellers who don't have much equity probably not candidates...

Jun 05, 2023 11:50 AM
John Meussner
Mortgages in AZ, CA, CO, DE, FL, GA, IN, MD, MN, MT, NC, NJ, NV, OK, OR, PA, SC, SD, TN, TX, UT, VA, WI - Fair Oaks, CA
#MortgageMadeEasy Fair Oaks, CA 484-680-4852

Hi Richie Alan Naggar --- what's happening in a buy down is the seller is basically paying the payment reduction cost for the buyer in a lump sum, then the lender distributes that lump sum over the course of months.  It's tedious (our loan origination software does the math for us), but you can figure it out as follows, using a 2/1 buydown as an example:


2/1 buydown with a 7% rate on a $500,000 loan

7% payment = $3326/month

Year 1 payment, 2% below note rate (so 5%) - $2684/month = $7704 payment reduction for year one

Year 2 payment 1% below note rate (6%) - $2997/month = $3948 payment reduction in year 2


Total cost to seller for the 2 years of payment reductions = $11,652


Jun 05, 2023 11:21 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
CEO of Vision Drive Realty - Coastal San Diego

Paralysis of Analysis of Rates: today's rates are not high,
they are actually lower since January
and the rates are simply today's rates.

They are only "high" when you time travel to compare them. 
If they jump in a month, understandable, but looking back beyond a quarter or more is pointless. You pre-approve in today's rates, not yesterday's.

  • Jan 30-year fixed mortgage rates: 6.500%, down from 6.625%
  • Feb 30-year fixed mortgage rates: 6.875%
  • Mar 30-year fixed mortgage rates: 6.54%
  • April 30-year fixed mortgage rates: 6.34%
  • May 30-year fixed mortgage rates: 6.43%

Comparing them to 2 years ago at 3%? What in real estate is relevant from 2 years ago today? Nothing but stats and data for trends/cycles.
Buyers living in the nostalgia of yesterday's rates are missing out on today's opportunities. Our clients need to live in the present, the past is done with them. Today's rates are not high, they are just today's rates.

12.9% was high, but that was 1989's rate for a 20 year old young man buying his first house, but I paid it to be a homeowner and I have ZERO regrets for jumping in when I did. Today's rates, are just today's rates.

Jun 05, 2023 07:27 PM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services


I would listen to Caroline Gerardo - she really knows her stuff! 


Jun 05, 2023 01:28 PM
Ryan Huggins - Thousand Oaks, CA - Thousand Oaks, CA
Residential Real Estate and Investment Properties

I have had some lenders mention this to me, but I've yet to have a buyer bring it up or a seller that would even consider it.  Sorry I can't be of more help to you on this.

Jun 05, 2023 11:27 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

There's still limits on how much a seller can pay so how much can a rate be bought down by a seller?

Jun 05, 2023 11:23 AM
John Juarez
The Medford Real Estate Team - Fremont, CA

A lender, perhaps here in the Rain, is the best source for a quality answer to your question, Richie Alan Naggar 

Jun 05, 2023 11:12 AM
Roy Kelley
Retired - Gaithersburg, MD

Home sellers in our area do not need to make any special offers.

Jun 05, 2023 03:08 PM
Peter Mohylsky, Beach Expert
PMI. Destin - Miramar Beach, FL
Call me at 850-517-7098

Not really a good idea for either buyer or seller 

Jun 05, 2023 02:35 PM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Isn't this just like an old VA deal? Sellers help so buyers can get in.

Jun 05, 2023 02:04 PM
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

I have not heard of ANY seller offering or even willing to buy down the buyer's rate . . . Caroline Gerardo has chimed in, that is who I would look to for the education. 

My residential gals say 'sellers would rather sit than do that' . . .

RE remains local and regional! 

Having said all that . . . we are usually 6-12 months behind LA, LV and Phx market trends . . . 

I've been telling pals wait a few months before buying a house . . . you might see some savings.

Jun 05, 2023 12:06 PM
Don Baker
Lane Realty - Eatonton, GA
Lake Sinclair Specialist

It's pretty expensive to buy down 30 year rates.  Don't know if there's enough to make a real difference in sales.  

Jun 05, 2023 11:28 AM
Bob Crane
Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI
Forestland Experts! 715-204-9671

Seems funny that buyers agents request that sellers purchase an interest buydown, yet it make me wonder, if this is such a good thing, why dont they suggest that their buyers do this?

Jun 06, 2023 08:37 AM
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
NC Real Estate Transition & Relocation 919-602-848

The seller can give a set amount or get with a lender to offer a percentage. I've had clients offer a dollar amount to use toward a buydown and they can choose how they want to use it.

Jun 06, 2023 05:49 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Do you mean paying a fee to bring down your borrowing rate? If so, it usually doesn't make sense because you would need to hold that mortgage for a long time to "work off" the upfront fee. Just crunch the numbers and you'll see. It's better to accept a higher rate for a longer period to lower your monthly payments until you can refinance in a better rate environment.

Jun 05, 2023 09:56 AM
Dave Skow
Movement Mortgage - Seattle, WA
Dave Skow

2-1 buybown cost  is normally in the range of  1.7% - 1.8% of the loan amount 

Jun 09, 2023 03:36 PM