More news from our Tuesday office meeting: Sue Baker-Dirickson, our in-house lender talked about the increase in mortgage interest rates and the need for buyers to "lock in" their rates.
Our local market in the Sunnyvale/Mountain View/Cupertino triangle continues to be strong, but should that change, there isn't much a seller can do to compete with other sellers for a buyer, other than lowering the asking price.
Lew Sichelman,in The Chronicle says,... "They can't throw in extras or upgrades like builders can, but sellers can go toe-to-toe with anyone, including builders, when it comes to financing. In fact, they can go even further than most builders do. What's more, they might find that helping would-be buyers qualify for a mortgage or trimming their monthly house payments might prove a much better alternative than cutting their prices -- and at a lower cost."
This is done through an interest-rate buy-down, which is usually one of the first tactics builders use to stimulate activity when sales start to slow. Individual sellers, on the other hand, rarely turn to buy-downs as a sales stimulus. Not because the move doesn't work for them, but because they don't realize the option is available.
Buy-downs aren't cheap, and they come right off the seller's bottom line. But in the long run, they achieve the same result -- that is, lowering the monthly payment -- as cutting your asking price. But the seller's bottom line takes far less of a hit with a buy-down than with a drop in price.
More about the types of buy-downs in tomorrow's post.
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