Real Estate Deals in New Builds and 3-2-1 Buy Downs

Austin real estate New Builds and 3-2-1 Buy Downs are Hot

Looking for Austin real estate deals?  Ready to buy a home or sell one? It’s time to make a move because Austin real estate is in a let’s make a deal market. Buyers who are serious about passing go can find their match with a seller ready to move on.

Home prices are up over last year, but the incline is now a steady slope. Interest rates are somewhat stable right now and inventory is high enough to have choices. There are plenty of real estate deals to be had out there for those that want to play. Price reductions, closing cost allowances, and rate buy-downs are all the rage.

What’s a buy-down?

A buy-down is a way to reduce the first, second and in the case of a 3-2-1 scenario, the third year of monthly payments via a subsidized fund that lowers the interest payment for the buyer by funding the difference through a seller concession. It does not reduce the interest rate.

Buydown funds are kept in a separate lender escrow account and pulled monthly to make up the differential in the rate. In a buy down, the buyer might pay 5% as an interest payment the first year, but on paper, the buyer’s mortgage interest is still 7% or whatever that consistent rate is through the life of a loan. The differential between the 5% and 7% in interest dollars is pulled from the lender’s separate escrow account. A buy-down is a way to ease the buyer into what they will ultimately be paying per month once the initial buy-down period is over, which may be 1, 2, or 3 years. It is a temporary reduction in the buyer’s payments.

A buydown might make sense for some. For others, asking for closing costs or making a lower offer might make more sense. The point is there are a variety of options out there for buyers right now, that can be tailored to their financial goals. Of course, restrictions apply which is why it is essential to begin your home search with a lender – not at an open house.

Austin Real Estate Deals with New Homes

The biggest deals right now are with new homes. The business model for a newly constructed home is not the same as the seller down the block. Home builders want to move their inventory off the books this time of year. A buyer who is open to a location should think about new home communities. Some builders reducing the prices of inventory homes, and others like Pacesetter Homes, are offering flex cash programs, which allow funds to be used on upgrades, closing costs, buying down the interest rate, or lowering the price of the home.

Ready to sell?

Thinking of selling? Is your home ‘move-in’ ready? Now is the time to really look around and finish those projects you barely notice anymore. They may be old to you, but they are fresh to a buyer. If you are ready to sell. That’s great news! You’ve got to be in it to win it, so you might as well get on the board. It’s a great time of year to show a home and nobody needs to move until next year. It may take longer than planned to sell, as there is only one buyer in the end and you never know what day they are going to show up.