Most of the buyers at closings for the last few months have not sold their current home yet. Many are close to all-out panic and ask what can be done to attract a buyer.

Some suggest offering a bonus to the selling agent of $1500 or more. But as one thoughtful agent that I know said "That would be great if I (the agent) was buying the house, but I’m not."

Another way to find a buyer is to offer an interest rate "buy down". Most lenders offer these, or you can just credit the buyer at closing and do it yourself.

How it works: Say the buyer would be getting a 6% mortgage for $200,000 to buy your home. You offer to "buy down" the interest rate to 4% for one year and to 5 % for the second year. In this example you would owe the Buyer at closing about $4200 for the  buy-down of the rate.

The monthly payments at these rates are as follows:

4% $954
5% $1073
6% $1199

The math is pretty simple. The Buyer gets a 6%, 30 year fixed rate mortgage. The seller contibutes the amount to buy down the rate each month for the first year to 4% (about $250 per month) and then continues to contribute the amount needed (about $120 per month in year 2) to buy down the rate from 5% to 4% in the second year. After that the Buyer has a 6% rate and is on his or her own.

You either give the buy-down funds to the Buyer directly at closing (or if done through the Buyer’s lender, the funds are placed in a separate account with the Buyer’s lender that is used to subsidize the payment each month for 2 years). Obviously you would have to cap the amount of the mortgage
size and interest rate.

Bottom line: But the bottom line is that the Buyer gets a really low rate for two years and you get your house sold.