Should you cut your asking price or offer a temporary rate buydown to get your Glastonbury home sold? If you are watching buyers hesitate over monthly payments, you are not alone. The right choice can widen your buyer pool, protect your comps, and improve your net. In this guide, you will see clear examples, plain‑English math, and a step‑by‑step plan tailored to Greater Hartford. Let’s dive in.
Seller buydown basics
A temporary seller buydown is when you credit funds at closing so the buyer’s mortgage rate is reduced for a set period, often 1 to 3 years. Common formats include a 2-1 buydown, where the rate drops 2 percentage points in year 1 and 1 point in year 2, then returns to the note rate. The funds are placed in escrow and applied monthly to cover the difference between the note-rate payment and the reduced payment.
A permanent buydown is different. You pay discount points to lower the note rate for the life of the loan. It is less common as a seller concession than a temporary buydown, but it can be effective when long-term affordability is the buyer’s priority.
Price cut basics
A price cut reduces the contract price. This lowers the buyer’s loan amount, their monthly payment at the note rate for the full term, and your gross proceeds. It also reduces percentage-based expenses, like commissions and some transfer fees, because those are calculated on the final sale price.
Price cuts can influence appraisal and comps because the closed price becomes part of the market record. A buydown, by contrast, does not change the recorded sale price, which can help you preserve neighborhood comparables.
Program rules and caps to know
Seller contributions are capped by loan program and buyer down payment. Conventional loans typically allow 3 to 9 percent of the price depending on down payment and occupancy. FHA commonly allows up to 6 percent for closing costs, prepaid expenses, and discount points. VA and USDA have their own limits and rules.
For temporary buydowns, lenders must approve the structure and documentation. Some lenders qualify the buyer at the note rate, even if the buyer will pay a reduced rate during the buydown period. That means a buydown can improve cash flow without changing qualification. Always confirm the lender’s approach before you advertise an incentive.
Local MLS rules in Greater Hartford can limit how you advertise incentives. Check acceptable phrasing before you publish language about rate buydowns or seller-paid financing.
The math, made simple for Glastonbury
Below are simple, hypothetical examples using a 30‑year fixed loan and a 7.00 percent note rate to illustrate how a 2-1 buydown compares to a price cut. Rates and program rules change, so confirm current numbers with a lender before you act.
Assumptions for both examples:
- 30‑year fixed, note rate 7.00 percent
- Down payment 20 percent
- Temporary 2-1 buydown (year 1 equals note rate minus 2.00 percent, year 2 equals minus 1.00 percent)
Example A: $400,000 sale price
- Loan amount: $320,000
- Monthly principal and interest at 7.00 percent: about $2,130
- 2-1 buydown payments: year 1 at 5.00 percent about $1,717, year 2 at 6.00 percent about $1,918
- Buyer savings: about $413 per month in year 1, about $212 per month in year 2
- Seller cash to fund the buydown at closing: about $7,506
If you use the same $7,506 as a straight price cut:
- New price: about $392,494, loan reduces by about $6,005
- Permanent monthly payment reduction at the 7.00 percent note rate: about $40
- Commission nuance: at a 5 percent total commission, a $7,506 price cut lowers commission by about $375, so your net cost is slightly less than the headline price reduction
Example B: $600,000 sale price
- Loan amount: $480,000
- Monthly principal and interest at 7.00 percent: about $3,195
- 2-1 buydown payments: year 1 at 5.00 percent about $2,574, year 2 at 6.00 percent about $2,877
- Buyer savings: about $621 per month in year 1, about $318 per month in year 2
- Seller cash to fund the buydown at closing: about $11,260
If you use the same $11,260 as a straight price cut:
- New price: about $588,740, loan reduces by about $9,008
- Permanent monthly payment reduction at the 7.00 percent note rate: about $60
- Commission nuance: at a 5 percent total commission, a $11,260 price cut lowers commission by about $563, slightly offsetting your cost
What the numbers mean
- A temporary buydown delivers large short-term payment relief for the buyer at a cash cost that is often much smaller than the permanent price cut required to create the same monthly reduction.
- A price cut is permanent and reduces your sale price, loan principal for the buyer, and percentage-based closing costs. It also shows up in comps and appraisal.
- A buydown preserves your headline price and comps, which can be valuable in Glastonbury neighborhoods where list price anchors buyer searches.
What works best in Greater Hartford
Favor a seller buydown when
- Rates are elevated and buyers are payment sensitive. A buydown can expand your buyer pool by improving early-month affordability.
- You want to preserve list price and neighborhood comps while still creating a strong affordability story.
- You are willing to fund a concession at closing and you expect buyers may refinance or see income growth before the buydown ends.
Favor a price cut when
- The market is soft and price is the primary search filter. Moving your listing into a lower price band can trigger more showings and offers.
- The buyer needs permanent payment relief, not just a two-year runway.
- You prefer not to bring additional cash to closing or lender overlays require qualifying at the note rate so a buydown would not help the buyer qualify.
Consider a hybrid
- Pair a modest price reduction with a 1-0 or 2-1 buydown. The lower headline price widens search visibility while the buydown delivers near-term payment relief.
- Publish the incentive with clear, compliant MLS language and a reasonable expiration to create urgency, if allowed by local rules.
How to set it up the right way in CT
- Talk to the buyer’s lender early. Confirm buydown eligibility, how the borrower will be qualified, and the exact escrow amount required.
- Put it in writing. Specify the buydown type, who pays, and how funds will be held and applied in the purchase agreement and closing instructions.
- Coordinate appraisal and comps strategy. Decide if preserving price is important to your broader goals. A buydown does not change the recorded sale price.
- Align listing language with Greater Hartford MLS rules. Some boards restrict how financing incentives are advertised. Get approval before you promote payment examples.
- Review tax and closing-cost impacts. Seller-paid points and concessions affect your net proceeds and may have tax considerations. Consult a qualified tax professional for guidance.
Quick decision checklist
- Market feel: Is buyer demand steady but payment sensitive? Consider a buydown. Is activity slow and price-driven? Consider a price cut.
- Your priority: Is preserving comps and price your goal? Favor a buydown. Is a fast, transparent signal more important? Favor a price cut.
- Buyer profile: Do likely buyers expect to refinance or grow income soon? A buydown can bridge the gap. Do they need long-term relief? Price cut or permanent points may fit.
- Cash at closing: Can you fund a concession without lowering the price? Choose a buydown. Prefer to reduce ticketed price and commission dollars? Choose a price cut.
- Lender rules: Will the lender qualify at the reduced rate or the note rate? If at the note rate, a buydown helps cash flow but not qualification.
Final thoughts
In Glastonbury and across Greater Hartford, the best strategy depends on your goals, the current rate environment, and how buyers are shopping in your price band. A temporary buydown often delivers stronger short-term affordability per dollar than a price cut, while a price cut provides permanent relief and a bigger signal in search filters. The right call comes from running the numbers and aligning with your timeline.
Want help choosing the smartest path for your home and price range? Let us model your net proceeds, structure lender-approved incentives, and market the offer clearly. Start a conversation with Robert Paskiewicz to request your free valuation or schedule a consultation.
FAQs
How much does a 2-1 buydown cost in Greater Hartford?
- On a sample $400,000 loan at a 7.00 percent note rate, a 2-1 buydown costs about $9,383, scaled up or down with loan size.
Do buydowns change how lenders qualify buyers in CT?
- Sometimes, but not always; many lenders still qualify at the note rate, so confirm the lender’s underwriting approach before offering a buydown.
Which draws more buyers in Glastonbury, a buydown or a price cut?
- It depends on demand; price cuts improve search visibility and comps positioning, while buydowns appeal to payment-sensitive buyers by lowering initial monthly costs.
How does a price cut affect my net with commissions?
- Because commissions are percentage-based, a price cut slightly reduces the commission dollars owed, which modestly offsets your cost compared with a same‑dollar buydown.
Can I combine a price cut with a buydown?
- Yes; a small price reduction plus a temporary buydown can widen your buyer pool and deliver early payment relief, subject to program contribution limits and MLS rules.
