Seller Concessions in Nashville: Too Many Buyers Shop on Price. Instead, Start With the Monthly Payment.
Updated: 3 days ago
Buy the Payment, Not the Price: 5 Steps Before You Make an Offer
Most buyers start with a price range. I’d start with a monthly payment.
The price on the listing is only one input. Your rate, your closing costs, the seller concessions in Nashville you negotiate, and the cash you keep in the bank after closing all decide whether a purchase is comfortable or a strain.
Here is the order I’d work through it, and I’d do it before touring a single home.
Pay down revolving debt first
Credit card balances are the first thing I’d tackle. Lenders weigh revolving debt more heavily than installment debt like a car loan or student loan, both in your credit score and in how they read your monthly obligations. A card balance can cost you more on a rate quote than a larger loan balance with a steady payment history.
Paying cards down before you apply can improve your score and lower your debt-to-income ratio. Both can improve your rate, and a better rate means a lower payment on every home you look at. Do this before you apply, because a lender will pull your credit at the start of the process.
Decide your comfortable monthly payment, then work backward
Don’t ask a lender what you can qualify for. Qualification is a ceiling, and it doesn’t account for how you actually live.
Decide what monthly payment fits your budget with room left over. Then work backward to a purchase price using current rates, property taxes, and insurance. If you start from the payment, the price becomes a result instead of a guess. Quick and dirty math for property tax and insurance is to take 0.5% of the purchase price for taxes and $150-200/month for your insurance.
Ask your lender for permanent rate buydown pricing
Ask your lender for a written estimate at three levels: a 0.25%, 0.50%, and 0.75% rate reduction. For each one, get the cost to buy it down, the new interest rate, and the new monthly payment.
Here is an illustration on a $400,000 loan at a 30-year fixed rate. *These are example numbers, not a current quote.
Rate | Monthly principal & interest | Savings vs. starting rate |
6.50% | $2,528 | n/a |
6.25% | $2,463 | about $65/mo |
6.00% | $2,398 | about $130/mo |
5.75% | $2,334 | about $194/mo |
Compare each tier’s savings against its cost and how long you plan to stay in the home. Those numbers also tell you how much to ask a seller to cover in additional concessions.
Stick with permanent buydowns and skip the 3-2-1 or 2-1 structures. A temporary buydown lowers your payment for the first year or two, then it steps up to the full rate. It makes the early payments look good without changing the loan you actually have. A permanent buydown lowers the rate for the full life of the loan. That is the payment you will live with, so that is the one I’d build around.
Calculate your total closing costs on top of your down payment
The down payment is only part of the cash you need. Closing costs sit on top of it, and a buydown adds to them. Closing costs can include: lender fees, title fees and insurance, prepaid taxes on the property, home owner’s insurance premiums (taxes and insurance premiums are collected up front for a certain number of months), and your rate buy down concessions.
Get a full estimate of your total cash to close. Then work out how much of it can come from seller concessions, covering closing costs and the buydown, so that less of it comes out of your pocket. Concession limits depend on your loan type and down payment, so confirm the exact cap with your lender before you write an offer.
Negotiate seller concessions in Nashville, and keep a nest egg
Once you know your numbers, put seller concessions at the center of your offer strategy. A concession that funds a permanent buydown lowers your payment every month for as long as you own the loan. In many cases that beats a price reduction of the same dollar amount.
Right now, seller concessions in Nashville are running between 2-6% of the purchase price to make the sale work. Sometimes, this mean you may pay more in purchase price, but then the seller covers a lot of up front costs for you. Plus, you get your payment in a comfortable place.
Don’t spend your last dollar on closing. Moving costs money, and so do the repairs and surprises that show up in the first few months of owning a home. Keep a cash reserve after closing so one unexpected bill doesn’t become a problem.
The Takeaway
Pay down the cards, set your payment, price the buydown, know your cash to close, and negotiate seller concessions in Nashville with a cushion left over. Done in that order, you make offers with real numbers instead of hoping the math works later. Most people aren’t paying cash for a home, if there’s financing involved, you’re trading rent for a mortgage, security in your monthly expenses and living scenario, as well as future equity. Don’t allow yourself to get so caught up in the price that you don’t look at all of the options and ways to make it work for your specific situation.
If you’d like help running these numbers for your own situation, reply to this email or reach out to my team directly. We are happy to walk through it.
Ian H. Ratliff
Broker/Owner of RATLIFF Real Estate
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