Price vs. Concessions: Navigating Real Estate Negotiations in a High-Interest Rate Market

Hello Hampton Roads,

We know that today's real estate world can be a bit tricky, especially with those stubbornly higher interest rates. So, if you're negotiating to buy a home you may be wondering, what's better-- Price or Concessions?  Well, we're about to break it down for you.

Price vs Concessions

Imagine you're selling your home or on the hunt for a new one. You might be faced with the choice of either dropping the price of the house or offering concessions. Most people automatically go for price but let's take a look at how concessions may be the better bet.

More Bang for Your Buck: Let's get real about price reductions. A $5,000 price cut may sound nice on paper but the truth is that it doesn't really have a huge impact on your monthly mortgage payment. Check this out, at a 7% interest rate on the 30 yr loan, you would save $6.65 in principal and interest per $1000 so that's $33.25/mo. On the other hand, a $5,000 contribution towards closing costs or rate buy-downs can be a game-changer.   

Less Out of Pocket: Concessions can make homeownership feel like a breeze. Closing costs are usually more of a hurdle for buyers than the mortgage--with the mortage the price of the home is financed over 30 yrs but closings costs are cash up front.  When sellers help with closing costs, buyers don't have to dig as deep into their wallets. It's like getting a discount at your favorite store, except it's for your dream home. 

Monthly Payment Magic: Concessions can also reduce your monthly mortgage payments. Permanent rate buy-downs or temporary buy-downs can keep more money in your pocket month after month. It's like having a coupon that keeps on giving.

These are great benefits for the buyer but the seller also benefits in that they get to preserve their list price thus keeping home values in the neighborhood strong and by offering concessions they can tailor the concessions (closing costs, rate buy down, home warranty, etc) to appeal to wide range of home buyers!

So, here's the scoop: in today's high-interest rate world, concessions are like a friendly hand reaching out to help you over the homeownership hurdle. While price reductions might sound tempting, they might not pack as much punch in terms of savings.

Concessions can be your secret weapon. They're flexible, making homeownership more affordable and accessible. So whether you're a seller looking to seal the deal or a buyer trying to make the most of your budget, concessions might just be your new best friend in real estate negotiations.

If you want to talk about the best strategy for your real estate plans whether you are buying or selling or both, let's chat. With a little teamwork and the right strategy, you'll be well on your way to real estate success today. Happy house hunting! 🏡✨

Thanks for Reading,



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