(buyer)Can I get the best deal possible? (realtor) Yes!
(buyer)Can I get the best deal possible and still get another $8k? (realtor) No.
(buyer)Why not? (realtor) Because the seller is really going to have a bottom line. If you get to that bottom line offer they will not take another $8k off the price.
(buyer) I guess I just need to negotiate and not think about getting a rebate from a seller. How about having the brokerages and realtors give back part of their commission instead so the seller can give me the bottom line price and I still get my $8k back? (realtor) NO WAY!!! We deserve every penny of our commissions! No way we want to just give up out commissions that way.
(end of conversation)
If my girlfriend went to the store and spent $500 she would tell me that she saved $80. Personally I see it as spending $500. So some people will view exactly the same situation completely differently. I know that when I shopped for my mortgage I thought I researched everythiong so skilfully. I later went to work for the guy that did my refinance and found out that I really didn't know anything at all.
I understand that the car has a certain minimum price where the salesman makes $200. He is trying hard to make more than that and offering a $8000 trade in is one of tyhe ploys to make you think that you are working the deal in your favoir and being a savvy shopper.
The difference with the buyer discounts is that people do not understand mortgages at all. They do not know of 321 buydowns or how points can help buy down the rate so when a seller of a home brings this "new" twist to the deal, it gives incentive to the potential buyer. If the wife wants the house but the husband is complaining about the price ( or vice versa) the discount can be the value that the spouse is looking for. It can provide that lower rate that now fits the budget. I think it is more effective than other discounts because you are also making the buyer aware of a product that could benefit them. At the end of the day they are really paying for it but the benefit to them may be a deal maker not a deal breaker.
Cornerstone Lending Inc
215 674 9059
Yes you are right on target. I looks like some of the same CEO types, that got our banks in trouble are pushing these cheeeeezy nation wide used car style campaigns. I feel our profession as realtors is hurt by these offers by sending another bad message to the consumer. After explaining how this worked to a professional couple recently. They recommended I avoid all of that brokers listings. And we did. They are happy in their home listed by an other firm with good honest advertising.
Maybe because it works...but isn't it kind of icky?
Do you think.... that maybe the more savvy Realtors should understand that most Buyers are better off taking a reduction in interest rate rather than a reduction in price?
Thank you for explaining that Buyers are NOT One Price Fits All!
First Weber Group
Certified Distressed PRoperty Expert
You expand your pool of potential Buyers.
With a 2% Seller concession a Buyer can choose to :
simply reduce the price by that amount
Use the money toward closing costs
Use the money toward discount points for a permanent interest rate buydown
Use the money toward discount points for a 2-1 temporary buydown.
Use the money toward a combination of any of the above.
It seems that most Realtors and consumers do not understand that those who opt to use the money for a Buydown are financially better off than those who opt to take a standard price reduction.
Quick example: You offer to pay $300,000 for a house that's listed at $310,000 and you take a 5% 30 year fixed rate loan. You would pay: $521,790 over the life of the loan. ($1,448.5/montth)
I offer to pay $306,000 for the same house and the Seller pays 2 points to buydown my rate to 4.5% for a 30 year fixed loan. I pay $502,344 for that same house. ($1,395.42/month)
Then if you have a third buyer who plans to stay in the property for only 3 - 5 years. He may opt to pay $306,000 and have the Seller Fund a 2-1 Temporary Buydown. This way he takes the $6,000 savings in the first two years of homeownership and makes a payment of $1,161/month the first year and $1,314/month the second year and then $1,478 for the remainder of the time he keeps the loan.
Buyers are NOT one price fits all ...some are cash-constrained, some anticipate an increase in earnings in the next 2 - 3 years and others want to gradually ease into homeownership...and for some payment speaks louder than price.