If you are considering a price reduction on a property that you have listed for sale there is an alternative to consider - an interest rate buy-down.� This can be a win for both the buyer and the seller.� Let me give you an example of how a $30,000 credit from the seller can be worth over $70,000 to a buyer.� If you have a property listed at $1.25 million rather than reduce the price $50,000, you can offer to buy down the interest rate on your buyer’s $1 million mortgage by one full percentage point by paying three points at a cost of $30,000.� For a $1 million dollar loan, fixed for seven years and with an interest-only payment, that would reduce the payment by $10,000 a year - one percent of $1 million = $10,000 - for a savings of $70,000 over the fixed term of the loan.� At today’s rates, the interest rate would drop from 6.50% to 5.50%, and the payment would drop from $5416 to $4583 per month.� Rather than cost yourself $50,000 with a price reduction, you have only spent $30,000 to buy down the interest rate.� The buyer wins twice - not only is the payment lower, but the points are fully tax deductible to the buyer in the year of purchase, regardless of who pays them, saving the buyer another $10,000++.� If you want more information on how to structure a buy-down give us a call.