Bridger PenningtonFund Launch & Investment Expert

Real Estate Broker's Genius Buy-Down Hack

9 Jan 2023 · 1 min

Watch on YouTube

1:00

This content was created by Bridger Pennington. This content was uploaded by Bridger Pennington. This is a YouTube video titled "Real Estate Broker's Genius Buy-Down Hack" (posted January 9, 2023). The excerpt is an instructional real-estate talk by a single speaker (labeled SPEAKER A) explaining a mortgage rate buydown tactic: using seller-paid closing cost credits (example: asking a seller on a $950,000 purchase to provide 2% toward closing costs) held in escrow and applied to buy down the interest rate. The speaker also discusses commissions (mentions a $9,000 broker commission and long-term interest savings over 30 years) and encourages creative negotiation to have sellers contribute to rate buydowns rather than simply lowering price.

Chapters

Walk people through a buydown. What would you do if you're looking at property right now? So I'll give you a real life situation. Yeah. This year, I'm buying a home, the purchase price was $950,000. There's commissions involved, a $9,000 commission to a mortgage broker was $144,000 over 30 years, I'm gonna pay your $9,000 in cash, your commission, I just saved myself $138,000, $136,000 over 30 years. And then I go to ask the seller, okay, I'll pay you the $950,000 instead of trying to negotiate. you know, $925,000, $930,000, because that's a fair deal. But what I want you to do is I want you to give me a 2% back in closing costs to go towards my rate buydown. Now I'm going to put that in an escrow account with my mortgage, and they'll apply all of that towards buying down the rate. So I paid off the commissions, I paid off— Prepaid commissions are paid upfront. Yep. Closing costs. They're paying 2% towards the closing costs rather than just, you know, interest and all this. Most buyers don't even think about. They think it's just part of it. Yep. I'm like, no, no, no, get creative.