Sellers: Why a Rate Buydown May Beat a Price Cut

Your home has been on the market longer than you hoped. Your agent brings up a price cut. Before you say yes... there may be a smarter move.

With mortgage rates over 7% now, buyers aren't only asking "What's the price?" They're asking, "What's my monthly payment?"

That one shift changes how you should think about lowering your price.

Every day on the market costs you money

While your home waits for the right buyer, you're still paying for it. Your mortgage. Your taxes. Insurance. Utilities. HOA dues. Lawn care and upkeep.

Let's say those add up to $2,700 a month. That's about $89 every day your home sits.

Sixty more days on the market? That's over $5,300 out of your pocket, with nothing to show for it.

A price cut isn't the only way to help buyers

When a home sits, most sellers lower the price. But there's another option: a rate buydown.

With a buydown, your price stays the same. Instead, you offer money that pays the buyer's lender to lower their interest rate. A lower rate means a lower monthly payment for the buyer... and that's what buyers care about most right now.

Here's where it gets interesting

On a $400,000 home, a buyer with 20% down at 7% would pay about $2,129 a month.

If you offer a $10,000 rate buydown, that payment drops to about $1,970.

To get the buyer to that SAME payment with a price cut, you'd have to drop your price by almost $30,000.

Read that again. A $10,000 buydown can do the work of a $30,000 price cut. Same lower payment for the buyer. About $20,000 more in your pocket.

The breakeven point for sellers

Here's a simple way to think about it. In our example, holding the home costs about $89 a day.

The $10,000 buydown equals about 113 days of holding costs.

The $30,000 price cut equals about 336 days of holding costs.

If a buydown helps your home stand out and sell sooner, you save twice: you keep more of your price, AND you stop paying to hold a home you're ready to leave.

A few things to keep in mind

Loan programs limit how much a seller can pay toward a buyer's costs. Your agent and the buyer's lender can confirm the limits.

The home still needs to appraise at the sale price.

Point pricing changes by lender and by day, so the numbers will shift.

No one can promise how fast a home will sell. Price, condition, and location still matter!

Run YOUR numbers

Your home, your costs, and your market are different from this example. So I built a free calculator just for sellers.

Plug in your list price and monthly holding costs. You'll see your daily cost to hold the home, your breakeven in days, and how much a buydown could save you compared with a price cut.

Let's talk strategy

If your home is on the market, or you're thinking about listing, let's run your numbers together. I'll help you build a plan to attract buyers and keep more of your hard-earned equity.

Let me know if you have any questions!

This post is for education only and is not a loan offer, tax, legal, or financial advice. Rates, points, and loan limits change often. Equal Housing Opportunity.