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Before You Cut the Price: How a Rate Buydown Can Protect Your Bottom Line and Still Win Over Buyers
09.10.2026 | English Blog
Before You Cut the Price: How a Rate Buydown Can Protect Your Bottom Line and Still Win Over Buyers
In today's mortgage rate environment, "rate" has become one of the most important words in any real estate transaction — whether you're selling or buying.
If you've listed a property and found yourself thinking "the offers aren't coming in at the price I hoped for" or "buyers keep asking for a big price cut," you're not alone.
Using a real Beverly Hills condo listing as an example, this post walks through a strategy that's proving far more effective in today's market than simply lowering the price: instead of cutting the price, the seller offers a credit that lowers the buyer's mortgage rate — a rate buydown.
1. WHY A RATE BUYDOWN OFTEN BEATS A PRICE CUT
For most buyers, the real hesitation isn't the sale price itself — it's the monthly mortgage payment. Compare two approaches on the same property:
Cutting the Price by $70,000
(to $1,500,000)
- Seller's loss: $70,000 off the bottom line
- Impact for the buyer: Only a modest reduction in monthly payment (mainly from the smaller down payment required)
- Downside: Pulls down neighborhood comps and can lower the perceived value of the property itself
Keeping the Price, Offering a $25,120 Buydown Credit
(Person Realty's recommended approach)
- Seller's cost: $25,120
- Seller's net proceeds: About $45,000 higher than the price-cut scenario
- Impact for the buyer: Rate drops from 6.5% to 5.875%, saving over $500/month — roughly $180,000 over the life of a 30-year loan
The seller spends roughly a third of what a price cut would cost, while the buyer gets more perceived value than a $70,000 discount would deliver. It's a genuine win-win.
2. A JUMBO LOAN EXAMPLE
On a $1,570,000 property like this Beverly Hills condo, a 20% down payment ($314,000) leaves a loan amount of $1,256,000 — a jumbo loan.
Jumbo loans often already carry competitive rates, and pairing one with a buydown makes the numbers even more compelling.
| No Buydown | Option 1: Permanent (1.5 pts) | Option 2: Permanent (2.0 pts) | |
|---|---|---|---|
| Price / 20% Down | $1,570,000 / $314,000 | $1,570,000 / $314,000 | $1,570,000 / $314,000 |
| Jumbo Loan Amount | $1,256,000 | $1,256,000 | $1,256,000 |
| Seller Credit | $0 | $18,840 | $25,120 |
| Rate (30-yr fixed) | 6.500% | 6.000% | 5.875% |
| Monthly Payment (P&I) | $7,938/mo | $7,530/mo | $7,429/mo |
| Buyer's Monthly Savings | — | $408/mo | $509/mo |
| Total Savings Over 30 Years | — | $146,880 | $183,240 |
Rates and points shown reflect August 2026 market conditions and can shift daily.
3. THREE FLEXIBLE WAYS TO STRUCTURE A BUYDOWN
Permanent Buydown
Lowers the rate for the full 30-year term — ideal for buyers planning to stay long-term.
2-1 Temporary Buydown
Reduces the rate by 2% in year one and 1% in year two, cutting monthly payments by roughly $1,200–$1,500 during that period. Popular with buyers who expect to refinance down the road.
Flex Credit
Gives the buyer flexibility to apply the credit toward closing costs, rate points, or whatever serves them best.
4. A NOTE FROM PERSON REALTY
In a higher-rate market, effective listing marketing is about more than putting a property on the MLS — it's about helping buyers (and their agents) clearly picture the actual monthly payment.
Person Realty works alongside a trusted loan consultant to give buyers real-time, concrete loan scenarios during the sales process.
If you're buying or selling in Southern California — Los Angeles, Beverly Hills, the South Bay, and beyond — we'd welcome the opportunity to help.
Download the Rate Buydown Simulation
View the One-Page Simulation (PDF)
Prepared in collaboration with Yoshi Maekawa, Loan Consultant, New American Funding.