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Updated over 1 year ago, 04/16/2023
Asking Seller’s to Pay For Interest Rate Buy Down
Hey everyone,
So I am recently under contract for a property that I negotiated from 180k to 175k with 2.5k seller’s credit. I had an inspection contingency where I wanted an inspection but would ask for no repairs.
Pass forward to after the inspection, and I find out that it’s pretty clear. No structural issues or hazards with the property but still definitely some things to fix like grounding wires, rubber roofing, etc. Can I still go back to the seller and ask for some additional help in sellers credit for those repairs to do myself?
Or, could I ask the sellers for help with covering my buy down interest rate? I am locked in at 5.75% in which I needed to do a 1.5% buy down rate (2.1k). How could I respectfully ask to see if they can either credit me more for repairs or credit me for the buy down rate? Is that something I can even still ask now?
I definitely will appreciate all types of feedback. Thanks!
Quote from @Wendy S.:
@Christin Nguyen
First, congrats on getting under contract with your first property.
Your realtor while new, should try to negotiate as best as possible for you. With that said, instead of trying to type what she is to ask the seller's agent, ask her to simply have a conversation with the agent first to see if her client would be amiable to granting that buydown percentage that you need. Then have her formally make the request.
If you're still within your DD period, as others have suggested, if your agent feels strongly that the property will appraise, then have her go on on the sales price and request the buydown amount on the back end. This way you have a win-win for all parties.
You could also see if the Lender has any Lender credits they could offer. Are there any courses that you could complete that could offer you any kind of credits as well.
Forgo asking for help due to repairs if you already said you would not be asking for any. Besides, I'm pretty sure the buydown rate will be more beneficial to you.
You've got this. Happy closing.
I didn’t realize you could ask the lender for lender credits! Any advice on how to do that tactfully? Thank you for your advice!
Hi Christin,
Of course you can ask. Weigh your options - does not getting what you want break the deal? Do your numbers still make sense (generate cash flow) without the buy down? If I were you I would write out why this is justified and ask your agent to deliver the short statement to the sellers. This will show them that this isn’t a money grab and they may be more inclined to give you what you want. All the best! Keep us updated.
Simple, pick up the phone and call your Lender and ask if there is any Lender credit that he/she can offer you. All the best.
Rule of thumb is that if this is a non occupied investment property the seller will only be able to contribute 2% off of the loan amount. I have had a ton of luck with seller concession in this area and it is totally achievable.
Most sellers would rather give you a credit or price reduction before placing money in escrow for repairs. In Ohio you have to escrow 1.5 times the amount of the quoted repair cost with a timeline set in place to execute said repair. This ties up the sellers money and most of the time would prefer the previous mentioned routes.
When in doubt run your numbers and show the seller! People are not unreasonable and you don't work for free. You need to see cashflow and if this is the way to achieve it then they would relatively understand.
Good Luck!
#3 House Hacking Contributor
- Real Estate Agent
- Los Angeles, CA
You issued an offer with certain financing terms. To ask them to buy down the interest rate for no reason might shut them off.
Many times Sellers have told me and my clients not to ask for anything from inspections. We still do and we still get money. It's all about presentation. I also recommend providing some guarantee that you are going close should they give you that credit. It's all about getting to the finish line. Sellers aren't going to want to go back to the open market, where they may get less money and still have carrying costs.
I would ask for the health and safety repairs and explain that it is just out of your budget. Also be willing to either (1) take it as is or (2) walk away. The person who cares the least has the most leverage.
Quote from @Nicolas Looman:
Rule of thumb is that if this is a non occupied investment property the seller will only be able to contribute 2% off of the loan amount. I have had a ton of luck with seller concession in this area and it is totally achievable.
Most sellers would rather give you a credit or price reduction before placing money in escrow for repairs. In Ohio you have to escrow 1.5 times the amount of the quoted repair cost with a timeline set in place to execute said repair. This ties up the sellers money and most of the time would prefer the previous mentioned routes.
When in doubt run your numbers and show the seller! People are not unreasonable and you don't work for free. You need to see cashflow and if this is the way to achieve it then they would relatively understand.
Good Luck!
Quote from @Rick Albert:
You issued an offer with certain financing terms. To ask them to buy down the interest rate for no reason might shut them off.
Many times Sellers have told me and my clients not to ask for anything from inspections. We still do and we still get money. It's all about presentation. I also recommend providing some guarantee that you are going close should they give you that credit. It's all about getting to the finish line. Sellers aren't going to want to go back to the open market, where they may get less money and still have carrying costs.
I would ask for the health and safety repairs and explain that it is just out of your budget. Also be willing to either (1) take it as is or (2) walk away. The person who cares the least has the most leverage.
I agree, the presentation needs to be tactful and respectful. My realtor is also an English teacher so hopefully that helps! I’ll keep u all posted lol
Quote from @Andrew Thomas Vedder:
Hi Christin,
Of course you can ask. Weigh your options - does not getting what you want break the deal? Do your numbers still make sense (generate cash flow) without the buy down? If I were you I would write out why this is justified and ask your agent to deliver the short statement to the sellers. This will show them that this isn’t a money grab and they may be more inclined to give you what you want. All the best! Keep us updated.
Unfortunately I did go bold ask for 3k to try and negotiate down but the sellers did not agree. I feel like my realtor didn’t relay my message in a way that I would have wanted. My primary focus was asking for help to buy down my interest rate and then I could close earlier, not just repairs. I wanted to incentivize the deal by focusing on quicker closing but I just felt like I wasn’t getting advocated for. But on a good note, I’m still getting the house with a little sellers credit from the original deal!
Quote from @Thomas Nordberg:
Quote from @Christin Nguyen:
Quote from @Thomas Nordberg:
Quote from @Christin Nguyen:
Quote from @Account Closed:
Lol, you are a very smart girl, first of all, you should find out if the seller is eager to sell the house, if the seller is in a hurry, then these problems are not a problem for you.
It is always awkward for new agents to ask for anything semi-non standard. That being said, she works for you, and if you want to relay that request, it's perfectly reasonable. In my experience it would be an ammendment stating something to the effect of "Seller to Pay $XXXX towards buyers rate buy down" (Or whatever specific label your lender uses). Alternatively, you can still request whatever issues want to be fixed resolved, and see what their response is.
A common misconception is that you can only request inspection repairs doing the due diligence period. You can ask at any time before closing, you just don't have the easy out of the contract if the sellers just say no. That being said, the still have a strong incentive to close escrow, and probably don't want to incur the opportunity cost of starting over. One more mortgage payment for them may be the same as just paying what you request. All they can do is say no, and then you decide how to proceed from there. Just asking should nor jeopardize escrow though, so your realtor doesn't have much to be hesitant about.
Hey, thanks so much. Definitely very helpful information. I think I'll ask the sellers to help contribute to my buydown rate and see how it goes!
Good luck! Let us know what they say for those of us now invested! lol
Unfortunately I did go bold ask for 3k to try and negotiate down but the sellers did not agree. I feel like my realtor didn’t relay my message in a way that I would have wanted. My primary focus was asking for help to buy down my interest rate and then I could close earlier, not just repairs. I wanted to incentivize the deal by focusing on quicker closing but I just felt like I wasn’t getting advocated for. But on a good note, I’m still getting the house with a little sellers credit from the original deal!
Quote from @Christin Nguyen:
Quote from @Andrew Thomas Vedder:
Hi Christin,
Of course you can ask. Weigh your options - does not getting what you want break the deal? Do your numbers still make sense (generate cash flow) without the buy down? If I were you I would write out why this is justified and ask your agent to deliver the short statement to the sellers. This will show them that this isn’t a money grab and they may be more inclined to give you what you want. All the best! Keep us updated.
Unfortunately I did go bold ask for 3k to try and negotiate down but the sellers did not agree. I feel like my realtor didn’t relay my message in a way that I would have wanted. My primary focus was asking for help to buy down my interest rate and then I could close earlier, not just repairs. I wanted to incentivize the deal by focusing on quicker closing but I just felt like I wasn’t getting advocated for. But on a good note, I’m still getting the house with a little sellers credit from the original deal!
Yes I’ve felt that way about past realtors. It’s important to put everything in writing and communicate clearly on what you need / want (and why!) from the other party. This will give your realtor an idea as to why you’re asking for.
Best of luck with future endeavors.
#1 Foreclosures Contributor
- Real Estate Professional
- West Palm Beach, FL
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#1 Foreclosures Contributor
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Quote from @Christin Nguyen:
Quote from @Wendy S.:
@Christin Nguyen
First, congrats on getting under contract with your first property.
Your realtor while new, should try to negotiate as best as possible for you. With that said, instead of trying to type what she is to ask the seller's agent, ask her to simply have a conversation with the agent first to see if her client would be amiable to granting that buydown percentage that you need. Then have her formally make the request.
If you're still within your DD period, as others have suggested, if your agent feels strongly that the property will appraise, then have her go on on the sales price and request the buydown amount on the back end. This way you have a win-win for all parties.
You could also see if the Lender has any Lender credits they could offer. Are there any courses that you could complete that could offer you any kind of credits as well.
Forgo asking for help due to repairs if you already said you would not be asking for any. Besides, I'm pretty sure the buydown rate will be more beneficial to you.
You've got this. Happy closing.
I didn’t realize you could ask the lender for lender credits! Any advice on how to do that tactfully? Thank you for your advice!
So you know, a Lender Credit is the opposite of a rate buy down…the lender gives you a cash credit back in exchange for a Higher interest rate.
Quote from @Andrew Thomas Vedder:
Quote from @Christin Nguyen:
Quote from @Andrew Thomas Vedder:
Hi Christin,
Of course you can ask. Weigh your options - does not getting what you want break the deal? Do your numbers still make sense (generate cash flow) without the buy down? If I were you I would write out why this is justified and ask your agent to deliver the short statement to the sellers. This will show them that this isn’t a money grab and they may be more inclined to give you what you want. All the best! Keep us updated.
Unfortunately I did go bold ask for 3k to try and negotiate down but the sellers did not agree. I feel like my realtor didn’t relay my message in a way that I would have wanted. My primary focus was asking for help to buy down my interest rate and then I could close earlier, not just repairs. I wanted to incentivize the deal by focusing on quicker closing but I just felt like I wasn’t getting advocated for. But on a good note, I’m still getting the house with a little sellers credit from the original deal!
Yes I’ve felt that way about past realtors. It’s important to put everything in writing and communicate clearly on what you need / want (and why!) from the other party. This will give your realtor an idea as to why you’re asking for.
Best of luck with future endeavors.
I am glad that you are still getting the property, and hopefully at the end of the day it doesn't impact your math too much. I think in todays market you still got a pretty good deal, below ask and 5.75% on the rate is not bad at all in a lot of markets.
The game of telephone that working with a realtor can turn into is often frustrating. A big part of why I got my license was to make it easier to communicate, and skip an intermediary. Good luck, hopefully the rest of the deal goes without a hitch!
