Does Anyone Remember the 2-1 Buydown Mortgage?

temporary 2-1 buy down


I had a buyer’s agent call me on my Rosemont listing, buyer’s just loved the house but they had a personal budget and desire for a monthly payment based on a $275,000 sales price. They could do the $288,500 but it would stretch them a bit much.  I have to say this, am I the only Realtor out there who remembers innovative financing that helps the buyer’s get the home of their dreams without the insecurity of an adjustable rate mortgage?

When I was a loan officer first in my career I did many 2-1 buydowns for buyers who wanted the safety of a lower payment at the beginning to their mortgage with the added security of a 30 year fixed rate loan.  This mortgage was a perfect fit.  How does it work?

Let us say that the note rate on a 30 year fixed rate is at 4.0%. A 2-1 buy down buys down the interest rate for a period of time that is lower than the 4.0% note rate. On a 2-1 Buydown the starting rate would be 2.0%.  The buyer would pay the lower payment based on this lower interest rate for the first 12 months of their loan. Beginning in the second year, month 13, the rate would go up 1.0% or to 3.0% in this case. The buyer would then pay the lower payment based on this rate for one more year.  In month 25 of the beginning of the third year the payment would be based on the 4.0% note rate and stay there for the remaining 28 years.   With a 2-1 Buy Down you have the lower interest rate like an adjustable rate mortgage combined with the security of a 30 year fixed rate loan.

It is truly a win-win situation as you help buyer’s get the home they love while having the lower payments they desire in order to help them ease into home ownership.  Today’s new crop of lenders and agents have not yet been though the need for innovative financing so their tool belts are not yet full.

So Buyers, if you see a home you absolutely love, but it might be a tad more then you were thinking to buy, yet you qualify for the home loan, the 2-1 Buydown may be the perfect mortgage product to help you buy the home of your dreams


Copyright © 2016 Craig J. Townsend

For Sale By Owner Statistics


With the evolution of the Internet more and more sellers are thinking of selling their home themselves. A lot of web sites have sprung up catering to this “do it yourselfer.” But is selling your home yourself a good idea even with the help of web sites? Lets first look at the National Association of Realtors statistics;

For Sale By Owner (FSBO) Statistics

  • FSBOs accounted for 8% of home sales in 2014. The typical FSBO home sold for $210,000 compared to $249,000 for agent-assisted home sales.
  • FSBO methods used to market home:
  • Yard sign: 42%
    • Friends, relatives, or neighbors: 32%
    • Online classified advertisements: 14%
    • Open house: 14%
    • For-sale-by-owner websites: 15%
    • Social networking websites (e.g. Facebook, Twitter, etc.): 15%
    • Multiple Listing Service (MLS) website: 10%
    • Print newspaper advertisement: 3%
    • Direct mail (flyers, postcards, etc.): 3%
    • Video: 2%
    • Other: 1%
    • None: Did not actively market home: 25%
  • Most difficult tasks for FSBO sellers:
  • Understanding and performing paperwork: 12%
  • Getting the right price: 6%
  • Preparing/fixing up home for sale: 6%
  • Selling within the planned length of time: 18%
  • Having enough time to devote to all aspects of the sale: 6%

I want to focus on just one statistic, the first one, for this post and dissect it,  “The typical FSBO home sold for $210,000 compared to $249,000 for agent-assisted home sales.” That is, FSBO’s sold for 6.38% less then other properties using an agent. That is more then the old standard 6% real estate commission of a decade ago.  Today it is down to 5%.  Why does this happen? Having been in the real estate field for over 25 years and having dealt with 100’s of buyers, many of whom have bid on FSBO homes before I became their buyer’s agent, the typical buyer’s psychology goes like this, “Since the sellers are saving on the real estate commissions, I am going to offer less by the commission amount.”  That is why the statistics are so close to a standard deviation based on the commission rate.  So you take on this chore yourself hoping to save on the commissions and then give up in sales price what you could have hired a Realtor to do for you.

It is frustrating enough to go it alone and it is another thing to meet with buyers who wish to lower their offer amount by the very amount you wanted to save in the first place.  I am not trying to talk you out of selling your home yourself, I only want to make you aware that there are lower cost listing options that obtains for you a broker/agent on your side and also saves you money, time and trouble.

My next post will be on the difficulty of getting the right price.

The Reasons Why You Need a Buyer’s Agent-They Save You Time and Money!



With the internet and all of the various online real estate apps around many buyer’s think that they don’t need a Buyer’s agent to help them find the home of their dreams. Well I have to ask you several questions.

  • How often does a listing agent call you back when you call them to see their listing?
  • How many listing agents do you have to make appointments with to see all of the different homes you want to see on any given day or on your weekend off?
  • Does looking at open houses all weekend long thrill you?
  • Do you think you will offer only what the online value algorithm says the property is worth?

These are just for starters. So let me break them down for you;

Answer: Listing agents are notorious for not returning phone calls, I’d say about 90% of the time you get only VM. With a buyer’s agent you only need ONE AGENT to show you every home in the area you are interested in buying. He/She can put together a tour for you and with his/her MLS lock box key he/she can get you into see them, or he/she can make all the calls for an appointment and get you in to see the homes. You have just saved yourself 100’s of hours of frustration and running around. And the nice thing is Buyer’s agents almost always answer their phones.

sold sign

Fact: In a hotter market most listings sell before they have an Open House. If you wait for the open house to see it, it may be gone before you ever have the chance.

I had a client who was also a  friend and he and his wife wanted to see almost every house in their price range in one area of town during the Memorial Day weekend a few years back. It was like Mr. Toads Wild Ride and I think we saw close to 100 homes in 2 days.  I have done this many times with my buyers.  We see 5, 10, or even 20 houses on a weekend.  This is next to impossible if you go it alone and try to contact every listing agent of every home you want to see.


The online value guides on ALL of the web sites are almost 100% wrong, 100% of the time.

Online Values are Erroneous: The online value guides on ALL of the web sites are 100% wrong, 100% of the time. In the hotter market of today the Big name real estate web sites are off by thousands of dollars. If you offer the lower value on all of your offers you will lose the home you want 100% of the time.

Then there are the other things you need to know about, like the facts that;

  • Regardless of what a listing agent may tell you they truly represent the seller, their primary relationship started out with them, not you. In my over 25 years of real estate experience I can’t tell you how many times I have actually caught listing agents in cahoots with sellers to keep pertinent facts about the property from the buyer’s.
  • Negotiating contracts, arranging inspections, analyzing them and then negotiating repairs with the seller. These are not something the average person knows how to do and even if you think you are up to the task not all inspectors are the same. There are very good ones, there are OK ones, there are bad ones and then there are the fraudulent ones out to take your money. A buyer’s agent with many years of experience already knows who to use and how to do what is necessary to make your purchase successful and a lot less stressful.

Many buyers’ think they owe a buyer’s agent a commission, they don’t, the seller pays ALL of the real estate commissions.

Many buyers’ think they owe a buyer’s agent a commission, they don’t, the seller pays ALL of the real estate commissions.  Many also think that if they go to the listing agent directly they will help them get the house at a cheaper price by lowering their commission.  Think this through for yourself, would you lower the amount of money you will be paid if someone came to you and asked you to do so?  Most Realtors are in the business to make money, not give it up.

These are only a brief summary of the issues that come up with every transaction and something you need to know and think about. A good agent saves you time, money, headaches, frustration and possible expensive repairs after you buy your new home. Put a good agent in your corner.

Hire a Realtor with over 25 year’s experience.

Lying to List

There are many little know secrets in the real estate profession that agents never want clients to ever know about. One of the most egregious is when a listing agent deliberately lies to get the listing.  This happens all the time.  Big well known listing agents or small, this practice is universal. The scenarios goes like this.

The potential listing agent tells the sellers that their house is worth way more than any other agent came up with in their Comparative Market Analysis’.  Then they say, “If you sign with me you will get way more money!”

Human nature being what it is, and the fact everyone wants more for their property, the sellers usually sign. When the house doesn’t sell because it is way above market value, the listing agent then goes back every two weeks trying for a price reduction until the house sells. It means the house is on the market longer, but it eventually does sell.  In a hotter market the agent may not need to lower the price, all they need to do is wait until the market rises until the market price equals the sales price. It may take months to do so, but eventually it gets there. Time on the market is thus extended to sell the property.

What the sellers don’t realize is that they have now rewarded this reprehensible practice and it is why it keep happening. I can’t tell you how many times I myself have lost a listing because of this unscrupulous practice and then sat back and watched the house go down in price until it sold in the price range I told the sellers it would sell in, or it took much much longer to sell then the sellers wanted.  I was honest and the other agent wasn’t, they got the commission through dishonestly.

So dear home sellers please try not to fall for this practice and if you have please realize that you can cancel the listing agreement at any time with your present listing agent and then hire the agent/broker that was honest with you to begin with. We need to stop rewarding this dishonest practice among some real estate agents.

Sellers Please Check Your Listing Online!


n photos

As an active agent constantly working with buyers and sellers I cannot tell you how many times while looking through all of the listings on the Sacramento Metro List I come across properties without 1 photo.  Crazy right? Not one photo was taken of the property!  It’s not like the old days when a digital camera cost a ton of money, I mean all of today’s cell phones all have cameras in them. There are two listing agents in the South area that are notorious for this. In all the years I have sold homes none of their listings ever had a photo.

Then there are the listings where there is only 1 photo. That’s it, one! You get to see the outside of the property but not one photo of the interior. It always makes me wonder what the agent is hiding. Is it a fixer? Is it well lived in? Are the seller’s or tenant’s slobs? We don’t know, it is all a mystery as there are no photos.  And what really gets my goat is that these agents are getting a 5% to 6% commission to do the least amount of work. That is what really makes me hot under the collar.

So home sellers, please I beg you, always interview your listing agent and find out what they are really going to do for you and then go on line and double check them. If your listing doesn’t have more than 4 photos then maybe it’s high time you fired your present agent and found another listing agent who goes over and beyond what others agents do.