Don’t Just Negotiate the Price—Negotiate the Payment

Happy Friday!

Every week I research what buyers are asking Google and ChatGPT about mortgages and homebuying, and this week there is a clear theme:

Buyers aren't just asking, “Can I get the house for less?”

They're asking:

“How can I make the payment—and the cash needed to close—work?”

And that creates an opportunity for Realtors.

46.2% of U.S. home sellers gave buyers some type of concession in May, the highest May percentage since Redfin began tracking the data. Even more interesting, about 16% of sales included BOTH a price reduction and a concession.

Here in Southern California, concessions were even more prevalent in some markets: 62.3% in San Diego and 54.8% in Los Angeles.

So, what should we negotiate?

This is where Realtors and lenders can work together:

Let's say your buyer is negotiating on a property and the seller is willing to give another $10,000.

The natural reaction may be:

“Great! Let's reduce the price by another $10,000.”

But is that actually the best use of the seller's $10,000?

Maybe.

Or perhaps that same negotiating power could be more valuable to your buyer if it's used toward allowable closing costs, prepaid expenses, discount points or an interest-rate buydown.

The important point is:

Don't automatically negotiate the price. Negotiate what creates the greatest benefit for THIS buyer.

Karen's Desk

Here's how I would approach the conversation.

Your buyer loves an $800,000 home. After some negotiation, the seller is willing to give another $10,000.

Before you automatically write the counter call me.

I can quickly compare the alternatives.

• What happens to the payment with a $10,000 price reduction?
• What if we keep the purchase price at $800,000 and negotiate an allowable seller credit instead?
• Could some of that money be used toward closing costs, allowing your buyer to retain more cash?
• Would paying discount points for a lower permanent interest rate create a greater long-term benefit?
• Would a temporary buydown help the buyer manage the payment during the first year or two?

There isn't one answer that works for every borrower.

And that's exactly the point.

Let's do the math BEFORE you write the counteroffer.

That's where a five-minute conversation between Realtor and lender can make a real difference.

Ask Karen

“Karen, my buyer wants another $10,000 off the price. Would they be better off asking for a credit?”

Maybe—and let's calculate it before you ask.

I want to know:

• What loan program are we using?
• How much is the buyer putting down?
• How much cash do they have available?
• What are their closing costs and prepaids?
• What is the cost of reducing the interest rate?
• How long does the buyer expect to own the home?
• Is the buyer more concerned about cash to close or monthly payment?

There are also limits on how much a seller can contribute depending upon the loan program, occupancy and transaction structure. Don't structure the concession in a vacuum.

Call me while you're negotiating.

That's when I can help you determine how to get the most value for your buyer from the dollars already on the negotiating table.

AI Prompt of the Week for Realtors

Copy and paste this into ChatGPT:

Act as an experienced Orange County Realtor representing a homebuyer in today's market. My buyer is considering making an offer on a home where we may have room to negotiate with the seller. Help me prepare a list of questions to discuss with my buyer's mortgage professional before deciding whether to negotiate a lower sales price, seller credit toward closing costs, or funds toward an interest-rate buydown. Focus on the buyer's monthly payment, cash to close, available reserves and long-term financial goals. Do not calculate loan terms or give mortgage advice; identify the questions I should ask the lender before structuring the offer.

The Takeaway

Your buyer may not need a dramatically cheaper house.

They may need a better way to structure the transaction.

So when you have negotiating room, bring me into the conversation before the counteroffer is written. Let's look at the buyer's financing and determine where those negotiating dollars can do the most good.

Have a wonderful weekend!

Karen Card
The Card Team
Sr. Loan Officer | NMLS #235218
American Pacific Mortgage Corporation

Helping Veterans, Self-Employed Borrowers, First-Time Buyers, Seniors, Families in Transition and Homeowners Navigate Today's Mortgage Market.