Before You Cut The Price, Consider The Rate

The housing market is not dead, but it has slowed, largely due to buyers' hesitation given the increase in the mortgage interest rate. A smaller buyer pool, fewer showings, and the pressure of accruing days on market in the face of the typically-slower fall and winter markets, have sellers nervous and considering price drops that may not be necessary. I ask them - are you jumping to make a change that isn't directly solving the problem? Are you truly overpriced compared to similar homes on the market or that have recently sold in your area? If not, the price may not be the problem.

I've been a realtor in Central Maryland, covering Baltimore, Harford, Howard, Anne Arundel and Montgomery Counties since 2018. I'm predominantly a sellers' agent, meaning the bulk of my business is listing and marketing properties to achieve my sellers' goals. I spend a significant amount of time understanding buyers' hesitations and objections and how to overcome them - whether its something happening in the market, like an elevated interest rate, or a specific deterrent at the property that could be fixed, addressed, reimagined, or repositioned. Whatever the hurdle is, I'm here to find it, tackle it, and get you to the finish line.

Today's Obstruction for Buyers In The Housing Market

As a seller’s agent in Central Maryland, its my job to understand what is motivating or causing hesitation among buyers. In this market, regardless of the housing product you’re offering, the recent rise in mortgage interest rates is impacting every listing. Today’s average interest rate for a 30-year mortgage is 7.3%, climbing steadily from its 2026 low point of about 6% this past February.

With interest rates on the rise, the buyer pool is shrinking. Some buyers shopping at a specific price point can no longer afford it; the corresponding monthly mortgage has become unaffordable. Others who have to move, are forced to reduce their budget, and therefore give up some items on their wish lists to keep their monthly mortgage from being out of reach.

As a seller who needs to sell, how can you capture and entice the buyers who do remain in the market?

Consider their actual pain point - their expected mortgage has become more expensive. Yes you could drop the price, but a price drop of, say 3%, isn't going to drastically change the monthly mortgage payment for most Marylanders. It's the mortgage interest rate that's squeezing them. So, address that.

How Can You Motivate Buyers In This Market?

With the mortgage interest rate being one of the main pain points for buyers today, as a seller, we need to address it. One option is to speak with a local lender, and then consider offering the buyer a seller-paid “2-1 Buydown.”

What Is A "2-1 Buydown?"

 A “2-1 Buydown” is a financing strategy by which a seller can a set fee in exchange for lowering the buyer’s mortgage interest rate in years one and two of their homeownership.

Why Is It Called A "2-1 Buydown?"

 In the first year of homeownership, the buyer enjoys a mortgage interest rate that is 2% LOWER than today’s mortgage interest rate. In the second year of homeownership, the buyer enjoys a mortgage interest rate that is 1% LOWER than today’s mortgage interest rate. In the third year of homeownership, and thereafter, the mortgage interest rate reverts back to the rate it was when the buyer committed to the loan. 2-1 relates to the 2% reduction and the 1% reduction in rate.

How Does A 2-1 Buydown Play Out?

 With the average mortgage interest rate today being about 7.3%, this means that with a “2-1 Buydown”, the buyer will have a roughly 5.3% mortgage interest rate for the entire first year of homeownership. In the second year, the buyer will have a roughly 6.3% mortgage interest rate. In the third year and thereafter, the buyer will have the 7.3% mortgage interest rate that is common today. This helps a buyer because the mortgage payments for the next two years are cheaper, gradually settling into the 7.3% rate later. It makes homeownership more attractive to the buyer today, in a rising interest rate environment.

What Does A 2-1 Buydown Cost The Seller and Why Should I Pay For This?

I always recommend we check with a lender to determine the exact cost to you as a seller before we market your willingness to participate in a 2-1 Buydown, but I recently collected the costs on about six different listings and on average, the 2-1 Buydown is costing the seller about 2.3% of the list price. Yes it does cost you money, but it also attracts buyers to your listing and wouldn’t you rather get your home sold rather than continuing to carry the costs of the mortgage, taxes, insurance, maintenance, utilities, etc all while racking up ‘days on market’ which will ultimately cause buyers further hesitation? It’s also likely going to cost you less than your next price drop and could deter that one buyer that’s the perfect match for your home from settling onto the sidelines, or from going to the next house that offered them an incentive that they couldn’t resist.

What Do I Do If I'm Willing To Participate In A 2-1 Buydown?

Shout it from the rooftops! If you’re willing to participate in a 2-1 Buydown, I add this to your listing (both in the description and in the imagery). I also share this with any realtors bringing their buyers to the house. We can also add it to online, email, and print marketing. We make sure the 2-1 Buydown can't be missed when buyers are considering your home.

The Goal Is To Sell Smarter

My job as a listing specialist isn't simply to put your home on the market and wait for a buyer. It's to understand what buyers want, recognize what's holding them back, and develop a strategy that allows you to overcome their objections, beat out the competition, and ultimately get your home sold. Selling is an active process and I'm here to get you the results you deserve.