Seller Buydown Strategy: Who has successfully implemented this tactic?

[Michael Dumler]

Exactly as it sounds, the seller buydown strategy is a seller's concession that reduces the buyer's mortgage interest rate, either for the duration of the loan or just for the first few years (permanent buydown, 3/2/1 buydown, 2/1 buydown). 

For those who have only been in real estate during the bull run, the seller buydown strategy was probably never on your radar since rates were at all-time lows. Depending on the lender, generally speaking, each seller concession point of the loan amount reduces the buyer's rate by 0.25% (lenders, please correct me if I'm wrong). 

Buyers, stop complaining about rates and start implementing this strategy into your offer process haha. For example, if you're analyzing a deal that is cash flow negative of $100-$200 per month, what would the pro forma project instead if you the seller were to buydown the rate by X%? Needless to say, work with a resourceful real estate agent and lender who are familiar with this strategy. 

Moreover, sellers, if your fix and flip property has been sitting on the market, start offering the buydown strategy to motivate potential buyers. 

Lenders, please chime in to provide your insights. Investors, have you utilized this strategy to make a deal work? I get the feeling we'll be seeing a lot more of this over the next year or two.