What Is A Seller Rate Buy Down? - YouTube

hey how you doing emma dempsey with treasure  coast mortgage here in florida uh today we'll  

talk about the seller rate buy down what it  is how it can help you as a buyer as a seller  

as a real estate agent or realtor um because uh  here's what's going on guys um i know uh there's  

some funny uh memes and videos out there about  that apple that anybody will buy for anything  

but in case you haven't noticed uh things are  starting to slow down a little bit starting to  

mellow out in fact uh here's a uh  you know an article here i'll share

you know that talks about how uh about 20 of  listings uh these days have price drops okay  

so you know maybe that's just sellers coming  out of the clouds from extremely over asked  

offers or it's softening but no matter how you  slice it you know there is a shift in the market  

you know i don't believe there's any kind of crash  on the horizon just because of supply and demand  

and demographics but i think the red hot market  of last year is changing so how do we uh you know  

how do we mitigate that and this might not be  pertinent depending on what area of the country  

you're in or anything like that but this is just  something that i want to talk to you about it's  

called a seller buy buy down or seller rate buy  down using points to buy down the rate okay but  

instead of uh if you're a seller and you know and  if you uh you're gonna be asked to drop your price  

you're getting lower offers instead of accepting  a lower price you keep your price up and give half  

of that requested rate buy down in the form of a  seller credit to buy down the buyer's rate okay so  

how does that work exactly all right so here is  a um an example uh so this is this is basically  

a five hundred thousand dollar purchase price  okay five hundred dollars on a purchase price  

450 5875 rate payment of 30 to 18. okay so the uh  the buyer says no i i want you to drop your price  

by 20 000. it's a 480. okay cool so what does  that do for a buyer you know so it saves them 108  

you know it drops from you know same rate this is  what's it and this is what 10 down guys fyi so a  

little a little bit of mortgage insurance okay so  um about 60 000 out of pocket you know it saves  

them about 2 600 out of pocket to drop 20 000 in  price because everything's right if it's 20 000  

off i get 20 000 less out of pocket no because  it's all scalable to financing so you know when  

you look at it just your loan balance you know it  goes down by a little bit and then it's still not  

that much different out of pocket you know but  it's more of a psychological thing so it's 108  

okay so what if you do you know uh number  three you know the third column is basically  

uh taking five hundred thousand dollars um from  uh from here and uh giving a ten thousand dollar  

credit you know towards uh the seller's rate  so instead of 5875 buys it down to five percent  

okay so it takes that down and drops our payment  to 29.71 under 3 000. saves them 246. all right  

and what is the effect like in order to get  the the price drop that matches what this  

does you'd have to get a 455 000 house you  know because if you matched it to that so  

that's roughly you know not exactly to the penny  but just a good rule of thumb so i need like a 50  

000 price drop to match the payment this is what  how we live every every month uh in order to to  

match that before 55. so uh that is that so this  is you know ultimately the strategy may or may  

not be pertinent to your market uh this is just  one example of course you know there's another  

angle to this which i'll discuss in another  video about what happens if the price drops  

and i did a video if you search on my channel  about uh appraisal gap using mortgage insurance  

to buy that down that's kind of how it would be  you can take a portion of that seller buy down  

buy your mortgage insurance and still still keep  your payment on and i'll do an illustration on  

a future video but uh go ahead and hit a like  on this video and go ahead subscribe for more  

information on mortgages uh current rate markets  and of course areas about moving to florida so  

uh this is just an example of the seller buy down  strategy um if you wanted to uh to figure it out  

if you're a realtor on listing side or if you  have a buyer a buyer in the market and maybe be  

losing out and you maybe want to make an offer  definitely give me a call go to dmcmorgage.com  

uh thank you so much for watching  and i'll see you guys on the next one