$25k Decision: Price Drop or Rate Drop? How to Bring Affordability Back 

Affordability is crucial in today’s market. If a seller has $25,000 to help close a deal, should they drop the price or reduce the interest rate? Click links to the right for breakdowns.>>>>>

➡️ Price Drop ($25k Reduction)

• New Price: $850,000
• Monthly Savings: $152.46
• Income Needed to Qualify: $12,461.58/month ($149,538.98/year vs $153k)

Effect: Helps bring in buyers qualified for $850,000 but only saves a small amount each month.

➡️ Rate Drop ($25k to Lower Rate)

• Interest Rate: Reduced from 6.5% to 5.25%
• Monthly Savings: $558.94
• Income Needed to Qualify: $11,516 /month ($138,195 /year vs $153k)

Effect: Makes the home affordable to buyers originally approved at $785,000, significantly expanding the pool of potential buyers.

➡️ Key Takeaway

Price Drop: Attracts buyers at $850,000.

Rate Drop: Attracts buyers previously qualified at $785,000.

For Buyer's Agents: Use this strategy to help clients afford higher-priced homes without overextending their budgets. Negotiating a rate reduction is often a better solution than a simple price cut to make homes more affordable.

Let’s work together to bring affordability back and make the market work for everyone!