Higher mortgage rates have changed the way buyers look at homes.
For many buyers, the biggest obstacle isn't necessarily the purchase price. It's the monthly payment.
At one point during the period reflected in recent CRMLS data, San Luis Obispo County homes were receiving a median of approximately 96% of their original asking price, while Median Days Active in MLS reached approximately 47 days.
That creates an opportunity for sellers and their agents.
Rather than waiting several weeks and eventually conceding approximately 4% through a price reduction, consider putting those negotiating dollars to work immediately as a seller financing incentive.
The Strategy
What If We Offered the 4% Up Front?
Use a $1,000,000 property as the example.
Traditional Strategy
Original asking price: $1,000,000
Reduced sale price: $960,000
Alternative Financing Strategy
Sale price: $1,000,000
Seller financing credit: Up to $40,000
The seller's economics can be similar — but the value delivered to the buyer can be dramatically different.
The Numbers
The Side-by-Side Comparison
Option 1
Traditional 4% Price Reduction
- Sale Price
- $960,000
- Down Payment
- 25% / $240,000
- Loan Amount
- $720,000
- Loan Type
- 30-Year Fixed
- Interest Rate
- 7.625%
- Estimated APR
- 7.690%
- Seller-Paid Buydown
- None
- Estimated Monthly P&I
- $5,096.11
Option 2
Seller Financing Strategy
- Sale Price
- $1,000,000
- Down Payment
- 25% / $250,000
- Loan Amount
- $750,000
- Loan Type
- Conforming 7/6 ARM
- Initial Interest Rate
- 5.875%
- Estimated APR
- 5.931%
- Seller Financing Credit
- Up to $40,000
- Estimated Initial Monthly P&I
- $4,436.53
$659.58
Monthly Payment Savings
$7,914.96
Annual Payment Savings
Approximately $55,405
84-Month Savings (Initial 7-Year Fixed Period)
$10,000
Additional Down Payment Required
"The buyer pays $40,000 more for the property and borrows $30,000 more, yet the illustrated monthly principal-and-interest payment is approximately $660 lower."
Why It Works
$40,000 Off the Price Isn't Necessarily Worth $40,000 to the Buyer
Reducing the purchase price from $1,000,000 to $960,000 only lowers the buyer's loan amount from $750,000 to $720,000 when the buyer puts 25% down.
The buyer is still financing the $720,000 balance at the illustrated 7.625% fixed rate / 7.690% estimated APR.
By contrast, the $1,000,000 transaction uses seller dollars strategically toward eligible financing costs and a permanent rate buydown, producing the illustrated 5.875% initial rate / 5.931% estimated APR.
The buyer finances $30,000 more but still has approximately $659.58 less in monthly principal and interest.
The Trade-Off
What Does the Buyer Give Up?
- 25% down on $960,000 = $240,000
- 25% down on $1,000,000 = $250,000
- Additional buyer down payment = $10,000
That $10,000 represents approximately 15 months of the illustrated $659.58 monthly payment savings. This is not characterized as a guaranteed return or investment — it is simply another way to see the trade-off.
Where the Dollars Go
Maximum Buyer Benefit
Seller contributions can potentially be used toward allowable costs such as:
- Permanent interest-rate buydown
- Eligible lender costs
- Title and escrow expenses
- Prepaid taxes and insurance
- Other allowable closing costs
The exact allocation depends on the borrower's loan program, actual costs, lender requirements, and agency guidelines. Learn more about conventional loans and how seller concessions work.
"Use the seller's negotiating dollars where they create the greatest financial benefit for the buyer."
For Listing Agents
Listing Agents — This Is a Marketing Strategy
A listing agent can use this approach from day one rather than waiting weeks for a price reduction. Instead of marketing only the price, market the payment.
Here's what that listing could look like:
$1,000,000 Purchase Price
Seller offering up to $40,000 toward buyer financing costs. For a qualified buyer putting 25% down:
Compare that with:
Approximately $660/month difference in principal and interest.
Free · No Obligation
Run a Seller Credit Scenario
Send the property address and anticipated listing price — we'll model the price reduction versus the seller credit + financing strategy side by side.
For Buyer Agents
Buyer Agents — Stop Automatically Asking for a Lower Price
Before automatically writing an offer below asking price, consider comparing a price reduction with a seller financing concession. Contact Justin before writing the offer so Assist Home Loans can model both scenarios — including what each option does to the buyer's monthly payment.
Curious what a payment looks like on your buyer's target property? Try the mortgage calculator for a quick estimate, or learn more about Justin Stearns.
"How do we use the seller's negotiating dollars to create the maximum financial benefit for our buyer?"
The Rules
Interested Party Contribution Guidelines
Under conventional guidelines, interested party contributions (seller credits) are limited by the buyer's loan-to-value ratio:
| Loan-to-Value (LTV) | Maximum Financing Concession |
|---|---|
| LTV greater than 90% | 3% |
| LTV greater than 75% through 90% | 6% |
| LTV 75% or less | 9% |
| Conventional investment property | 2% |
The example transaction in this article:
- Purchase Price: $1,000,000
- Down Payment: $250,000
- Loan Amount: $750,000
- LTV: 75%
Therefore, an eligible primary-residence or second-home conventional transaction at 75% LTV may generally permit financing concessions up to 9%, subject to actual eligible costs and Fannie Mae/Freddie Mac requirements.
The proposed 4% credit is therefore below the percentage limitation in this particular example.
Also important: seller credits cannot simply be paid to the buyer as unused cash, and they remain subject to allowable actual costs and applicable guidelines.
Stop Selling Price. Start Selling Payment.
The core comparison, at a glance.
Traditional Price Reduction
- $960,000 Purchase Price
- $240,000 Down
- $720,000 Loan
- 30-Year Fixed
- 7.625% Rate
- 7.690% Estimated APR
- $5,096.11 Monthly P&I
Seller Financing Strategy
- $1,000,000 Purchase Price
- $250,000 Down
- $750,000 Loan
- 7/6 ARM
- 5.875% Initial Rate
- 5.931% Estimated APR
- $4,436.53 Initial Monthly P&I
$659.58
Monthly Difference
$7,914.96
Annual Difference
Approximately $55,405
84-Month Difference
Next Step
Turn Tomorrow's Price Reduction Into Today's Buying Power
If you're preparing for a listing appointment, send me the property address and anticipated listing price.
I'll help you compare:
and show you what each option actually does to the buyer's monthly payment.
Buyer agents can do the same thing before submitting an offer.
Rather than automatically asking:
"How much can we get off the price?"
Ask:
"How do we use the seller's negotiating dollars to create the maximum financial benefit for our buyer?"
Justin Stearns
Mortgage Broker | Assist Home Loans
NMLS #258870 · CA DRE #01504336
805-757-0544 · www.assisthomeloans.com
Make Your Seller 4% More Attractive.
No peptides required.
Disclosures & Sources
Local Market Data
San Luis Obispo County market statistics referenced in this article are derived from California Regional Multiple Listing Service, Inc. (CRMLS) InfoSparks / ShowingTime Plus data reviewed September 29, 2026.
During the period displayed, San Luis Obispo County's Median Percent of Original Price Received reached a low of approximately 96%, while Median Days Active in MLS reached approximately 47 days.
These are historical monthly data points within the reporting period and are not representations of the current reading for every property, price range, neighborhood, or market segment.
Sources: Percent of Original Price Received · Median Days Active in MLS
Interested Party Contributions
Fannie Mae and Freddie Mac generally permit financing concessions on eligible primary residences and second homes of up to 3% when LTV exceeds 90%, 6% when LTV is greater than 75% through 90%, and 9% when LTV is 75% or less. Conventional investment properties are generally limited to 2%.
Contributions remain subject to actual allowable borrower costs, loan-program requirements, lender requirements, and all applicable underwriting guidelines.
Financing Strategy Illustration
The seller-credit financing example assumes: $1,000,000 purchase price; $250,000 down payment; $750,000 loan amount; 30-year amortization; 7/6 adjustable-rate mortgage; 5.875% initial interest rate; approximately 5.931% estimated APR; $4,500 in assumed APR finance charges. At the initial 5.875% rate, estimated monthly principal and interest is $4,436.53.
Traditional Sale Illustration
The traditional-sale example assumes: $960,000 purchase price; $240,000 down payment; $720,000 loan amount; 30-year fixed-rate mortgage; 7.625% interest rate; approximately 7.690% estimated APR; $4,500 in assumed APR finance charges. At 7.625%, estimated monthly principal and interest is $5,096.11.
The resulting illustrated principal-and-interest difference is approximately $659.58 per month, $7,914.96 per year, or approximately $55,405 over 84 months, assuming no prepayment, refinancing, or other change.
Taxes, homeowners insurance, HOA dues, mortgage insurance, and other housing expenses are excluded from these payment examples.
APR Disclosure
The APRs shown are estimates calculated using the stated loan amounts, note rates, 30-year amortization periods, and $4,500 in assumed APR finance charges. Final lender-disclosed APRs may differ.
Because the 5.875% example is a 7/6 adjustable-rate mortgage, its final Truth in Lending APR may also be affected by the applicable index, margin, introductory-rate treatment, adjustment schedule, rate caps, and assumptions required under Regulation Z.
A 7/6 ARM generally has an initial rate fixed for seven years, after which the interest rate and payment may adjust every six months according to the terms of the loan. Future rates and payments may increase or decrease.
The 84-month comparison therefore applies only to the illustrated initial fixed-rate period and does not imply savings after the first adjustment date.
General Mortgage Disclosure
Rates, APRs, loan pricing, and programs are subject to change without notice and depend on borrower qualifications, credit profile, occupancy, property type, loan amount, loan-to-value ratio, market conditions, and other underwriting requirements.
Seller credits may only be applied toward costs permitted under the applicable loan program and cannot exceed actual eligible costs. Any reference to seller-paid financing costs assumes sufficient eligible costs exist to utilize the credit.
This material is for informational and real-estate-professional educational purposes only and is not a commitment to lend. Final rate, APR, payment, and loan terms must be determined through an actual loan application and applicable lender disclosures.