6/8/2023 – Payment or Price? What matters to the buyer?

We have seen a mini-surge of listings in the past week, and things are not moving as quickly. I get that your seller thinks that it is a sellers’ market, and it is, but with higher rates, things change a bit. We went through this last year when rates were a little higher than they are now, and those buyers did well to buy at the time now that prices have increased again. Remember, there are quite a few options from the 1/0 buydown, the 2/1 buydown, or the 3/2/1 buydown. Also, buying down the interest rate by an extra point or two works well on some loans. As you can see below, rates buy down well on our Jumbo product.

Below is something I sent an agent I am working with that is negotiating with a buyer on their listing. They are about $100K apart, and this is what I sent to Bridge the Gap:

Seller wants 1.8 – Buyer is at 1.7

The buyer at 1.7 - 20% down at 6.75% with 1 point = $8820.93 + Taxes and Insurance

$1,850,000.00 - 20% down – 1 point – 6.750% – $9599.25 + taxes and Insurance

$1,850,000.00 - 20% down – 2 points – 6.250% – $9112.61 + taxes and Insurance

$1,850,000.00 - 20% down – 3 points – 5.750% – $8636.88 + taxes and Insurance 

Each point costs $14,800

$1,775,000.00 - 20% down – 1 point – 6.750% – $9210.09 + taxes and Insurance

$1,775,000.00 - 20% down – 2 points – 6.250% – $8743.18 + taxes and Insurance 

$1,775,000.00 - 20% down – 3 points – 5.750% – $8286.73 + taxes and Insurance

Each point costs $14,200

Does the buyer care more about price or payment?

If they care about payment, the seller in the above case could sell the home for 1.85, pay 3 points, $44,400 plus (the buyer was going to pay a point anyway). The seller still gets their 1.8, and the buyer receives a slightly lower payment and gets a credit from the seller to buy down the rate. If they meet halfway, the seller may pay one or two points. They net closer to 1.75, and everyone is happy, and the buyer has a lower payment or a much lower payment if they go to the 3-point option.

When you have a listing and are trying to work things out with the buyer, please don’t hesitate to call me. If you have a buyer and you are trying to work a deal, please don’t hesitate to call me. THIS IS HOW WE DO IT!!! It’s teamwork that makes us successful! Together we can conquer the world!

Rates are better today and back to where we were last Thursday! It’s been a rocky road lately, and we never know where we are going from minute to minute, but I still believe that rates will slide lower in the near future.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• Government Loans (FHA / VA) are in the high 5’s.
• Conventional Loans up to $726,200.00 are in the 6’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the 6’s
• Jumbo loans above $1,089,300 are in the 6’s
• 5/1, 7/1, 10/1 Arms are in the high 6’s.
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• No income qualifier – 20% down with reserves! In the 8’s and 9’s!
• 0 down loans are in the mid to high 6’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.99% with limited fees – But they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until 2024!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am around all weekend if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!