Thinking about dropping your list price to spark offers? In La Crescenta–Montrose, a seller-paid mortgage rate buydown can sometimes deliver the same buyer affordability while protecting your sale price. If you are weighing both options, you are not alone. Many local sellers are navigating a rate-sensitive market where buyers focus on monthly payment, not just price. In this guide, you will learn how each tactic works, when to use it, and how to run a simple, apples-to-apples comparison so you can choose with confidence. Let’s dive in.
What a rate buydown is
A rate buydown lowers a buyer’s mortgage interest rate using funds you provide at closing. It can be temporary or permanent.
- Temporary buydown (2-1 or 1-0)
- 2-1 buydown: the buyer’s rate is 2% lower in year 1, 1% lower in year 2, then returns to the note rate in year 3. Your dollars go into an escrow account that subsidizes the early payments.
- 1-0 buydown: the buyer’s rate is typically 1% lower for the first year, then returns to the note rate.
- Permanent buydown (discount points)
- You pay discount points at closing. One point equals 1% of the buyer’s loan amount and reduces the interest rate for the life of the loan. The rate reduction per point varies by lender, loan type, and market conditions.
Lenders have specific rules for both options. Funds are documented at closing, and underwriting must approve the structure. For temporary buydowns, many lenders still qualify buyers at the full note rate. For permanent buydowns, the lower note rate generally applies to qualification as long as the program allows seller-paid points.
How price cuts work
A price reduction simply lowers the contract price. That reduces the buyer’s loan amount if they keep the same down payment percentage, which lowers their monthly principal and interest. It also reduces your net proceeds dollar-for-dollar.
There is no special underwriting for a price cut. It is straightforward, highly visible in buyer searches, and can move your listing into a different price band.
Buydown vs price cut: What actually changes
- Buyer monthly payment
- Buydown: lowers the monthly payment by reducing the interest rate temporarily or permanently.
- Price cut: lowers the monthly payment by reducing the loan amount.
- Your net proceeds
- Buydown: you pay a known dollar amount at closing to fund the buydown.
- Price cut: you give up the entire amount of the reduction from your sale price.
- Market signal
- Buydown: helps with affordability while preserving list price for comps.
- Price cut: creates immediate search visibility and clarity on price.
What matters most in La Crescenta–Montrose
The “better” move depends on live local data. Before you decide, gather a quick snapshot from recent activity in La Crescenta–Montrose:
- Active listings and months of inventory
- Median and average days on market
- Recent sale-to-list price ratios
- Percentage of cash vs financed buyers
- Typical loan types and down payments (conforming vs jumbo, FHA, VA, conventional)
These inputs tell you whether you are in a seller-leaning environment, a balanced market, or a softer, buyer-leaning stretch. They also reveal how sensitive local buyers are to monthly payment and lender rules.
Buyer mindset and marketing impact
Most buyers think in monthly payment terms. In a rate-sensitive moment, a buydown can make your home feel more affordable without lowering the list price. That can help you attract qualified buyers who are right on the edge of approval.
A price reduction, on the other hand, is highly visible. It instantly repositions your home in MLS searches and can trigger alerts for buyers who filtered you out. If showings are slow and days on market are rising, this visibility can matter more than preserving price benchmarks.
In La Crescenta–Montrose, many buyers commute to Glendale or Los Angeles and prioritize predictable monthly costs. A small change in payment can tip your home from almost affordable to workable. That is why a payment-focused incentive like a buydown can be compelling.
Lender and appraisal checkpoints
- Appraisal: A buydown does not change appraised value directly. Appraisers focus on comparable sales, condition, and features. A price reduction, however, resets the sale price and can influence future comps.
- Underwriting: Lenders often qualify buyers at the full note rate for temporary buydowns. Permanent buydowns use the reduced note rate per program rules. Documentation must match program guidelines, and escrow needs to handle buydown funds correctly.
Confirm these details with lenders before you advertise any incentive.
When a buydown makes sense
Use a buydown when you want to boost affordability without changing your list price:
- Showings are strong, but buyers get stuck on monthly payment.
- Inventory is moderate to low, and you want to preserve nearby comps.
- Lenders confirm buyers can qualify if their early payments drop.
- You want to widen the buyer pool and create a clear marketing hook.
When a price cut makes sense
Use a price cut when visibility and speed are your priority:
- Showings are light and days on market are rising.
- You need to appear in a lower price band to hit buyer filters.
- Recent local comps and feedback show your price sits above the market.
- You want the simplest path to renewed attention and offers.
A simple illustration
Below is an illustration to show how the math can work. Use your current list price, local rate quotes, and buyer down payment to run your own numbers.
- Assumptions for illustration only:
- List price: $900,000
- Buyer puts 20% down, so the loan is $720,000
- 30-year fixed note rate without buydown: 6.75%
- With a 2-1 temporary buydown: 4.75% in year 1, 5.75% in year 2, then 6.75% in year 3+
Estimated monthly principal and interest:
- At 6.75% (no buydown): about $4,668 per month
- At 4.75% (year 1 of 2-1): about $3,755 per month
- At 5.75% (year 2 of 2-1): about $4,200 per month
Payment savings from a 2-1 buydown vs no buydown:
- Year 1 savings: about $913 per month
- Year 2 savings: about $468 per month
- Approximate total subsidy needed for 24 months: about $16,572
Price-cut equivalent for the same first-year payment reduction:
- To reduce the year-1 payment by roughly $913 at 6.75%, you would need to reduce the buyer’s loan by about $140,900.
- With 20% down, that implies a price cut of about $176,100.
What this shows: a 2-1 buydown can deliver a large short-term payment reduction at a much smaller cost to you than a price cut that achieves the same monthly payment. The payment advantage is temporary, so buyers must still qualify for the full note rate when the buydown ends. For permanent buydowns using points, ask a lender for current quotes on how many points are needed to reduce the rate and what that does to monthly payment.
How to compare your options step by step
Use this checklist to make a clean, side-by-side decision with current La Crescenta–Montrose data.
- Gather local numbers this week
- Days on market, active inventory, and sale-to-list ratios
- Financing mix and typical down payments for recent sales
- Current rate quotes and buydown cost estimates from a couple of local lenders
- Run the math
- Compute your net proceeds under three paths: no change, seller-paid buydown, and one or more price cut scenarios.
- For the buyer’s monthly payment, plug in the loan amount, current rate, and any buydown structure to see the difference.
- Confirm lender and escrow details
- Ask lenders how buyers will be qualified and how buydown funds must be handled.
- Verify any limits on seller concessions for the loan program.
- Choose your marketing message
- If using a buydown: “Seller will contribute to a 2-1 buydown. Ask for details on payment schedule.”
- If reducing price: adjust list price to hit a strategic search band and announce the change across channels.
- Review tax and legal questions
- Ask your accountant about the tax treatment of seller-paid points or concessions.
- Confirm required disclosures and addenda.
- Monitor and pivot
- If a buydown does not generate offers within 1 to 2 weeks, consider a price adjustment or a combined approach.
- If a price cut does not create momentum, revisit presentation, promotion, and your next pricing step.
Real-world scenarios you might face
- Strong demand, price-band sensitive buyers
- Many showings but financing is tight at current rates. A temporary buydown can widen the qualified buyer pool without cutting price.
- Few showings, high days on market
- Your home is outside common search filters. A targeted price cut can reset visibility and create urgency.
- Need to move quickly
- A price cut is usually the fastest lever to trigger offers and shorten time on market.
- Preserve neighborhood comps
- If you want to avoid lowering comparable sales, a buydown or seller-paid points can support buyer affordability while keeping price intact.
Bring it together for La Crescenta–Montrose
Both strategies can work. A buydown shines when buyers are payment-focused and you want to protect sale price. A price cut shines when you need immediate visibility and traction. The best choice depends on current local metrics, lender rules, and your priorities on speed, net proceeds, and comps.
If you want help running the numbers and crafting the right message for today’s buyers, reach out. With a marketing-first approach and clear pricing strategy, you can meet the market where it is and move with confidence.
Ready to compare your options with local data and a custom plan? Connect with Kym De Lorenzo to get started.
FAQs
What is a 2-1 buydown for La Crescenta–Montrose home sales?
- It is a seller-funded incentive that lowers the buyer’s mortgage rate by 2% in year 1 and 1% in year 2, then returns to the full note rate in year 3, subject to lender approval.
How does a price cut change a buyer’s monthly payment?
- A lower price reduces the buyer’s loan amount, which lowers principal and interest; the impact depends on down payment and the prevailing interest rate.
Will offering a buydown affect my appraisal in La Crescenta–Montrose?
- A buydown does not directly change appraised value; appraisers focus on comparable sales and property condition, while the buydown addresses buyer affordability.
Do lenders qualify buyers at the reduced buydown rate?
- Often, lenders qualify buyers at the full note rate for temporary buydowns; permanent buydowns may use the reduced rate per program rules, so confirm with the lender.
Which option improves listing visibility more: buydown or price cut?
- A price cut is more visible in searches and can move your home into a new price band; a buydown is a marketing hook that highlights lower payments without changing list price.
Can I combine a small price cut with a buydown in La Crescenta–Montrose?
- Yes, some sellers pair a modest price reduction with a buydown to boost both visibility and affordability, depending on market feedback and budget.
