Should Pasadena Sellers Offer Rate Buydowns or Concessions to Attract Buyers?

Should Pasadena sellers offer rate buydowns or concessions to attract buyers?

Answer:
Offering a mortgage rate buydown or seller concession can make your Pasadena home more appealing—especially in today’s higher interest rate environment. These incentives can help buyers afford more while keeping your net proceeds strong. May Kunka advises sellers on when these strategies make sense and how to use them effectively.

What Are Seller Concessions and Rate Buydowns?

Seller Concessions

A seller concession is money the seller agrees to credit the buyer at closing. This can cover:

• Loan closing costs

• Prepaid taxes and insurance

• Temporary or permanent rate buydowns

It’s essentially a financial tool to help the buyer afford the home without lowering the purchase price outright.

Rate Buydowns

A rate buydown is when the seller (or builder) pays points to temporarily or permanently reduce the buyer’s mortgage interest rate.

Common options include:

• 2-1 Buydown: Interest rate is 2% lower the first year, 1% lower the second year.

• Permanent Buydown: Rate reduced for the life of the loan.

Why They’re Gaining Popularity in 2025

Interest rates in 2025 have remained relatively high compared to previous years, meaning buyers’ monthly payments are larger—even when home prices stabilize.

Offering a concession or buydown can:

• Expand your buyer pool.

• Make your home stand out among similar listings.

• Speed up the sale without having to reduce your asking price.

Example:
A $1.2M Pasadena home might attract a buyer at full price if you offer a $15,000 credit for a rate buydown—versus lowering the list price by $50,000 to get the same buyer interest.

Pasadena Market Insight

In Pasadena, concessions are becoming more common, particularly for listings priced above $1.5 million. Homes in Linda Vista, Arroyo Seco, and Madison Heights have seen creative offers where sellers provide 1–2% credits to help buyers offset financing costs instead of reducing price.

When Offering Concessions Makes Sense

• Your home has been on the market longer than 30 days.

• You’re competing with new construction or builder incentives.

• You’re marketing to first-time buyers or move-up buyers sensitive to rates.

• You want to avoid price reductions while maintaining strong perceived value.

How to Use Them Strategically

1. Advertise Clearly: Promote the buydown or concession in your marketing materials (“Seller offering credit toward rate buydown!”).

2. Work With Lenders: Ensure your buyer’s lender approves the credit structure.

3. Run the Numbers: May Kunka provides a seller net sheet showing how concessions compare to a price reduction.

4. Target the Right Buyers: Focus on buyers financing their purchase—not all-cash buyers who won’t benefit.

Common Seller Mistakes

• Offering blanket credits without verifying lender limits.

• Reducing list price and offering concessions—hurting net unnecessarily.

• Marketing the incentive poorly so buyers don’t understand its value.

How May Kunka Helps Sellers Decide

• Analyzes buyer demand and lending trends in real time.

• Coordinates with trusted local lenders to structure buydowns correctly.

• Markets incentives to highlight your listing’s financial advantage.

• Negotiates terms that protect your net while appealing to rate-sensitive buyers.

Final Thoughts: A Smart Alternative to Price Cuts

Rate buydowns and concessions are creative ways to help buyers overcome affordability challenges without sacrificing your bottom line. With May Kunka’s guidance, Pasadena sellers can use these tools to stand out—and sell faster—in today’s market.

Ready to Attract More Buyers Without Cutting Price?

Contact May Kunka to create a customized marketing and pricing plan that uses concessions or rate buydowns to your advantage.