Mortgage Money Myths: My House Isn’t Selling. Should I Lower the Price?
The Smarter Mortgage Series
Your house has been on the market for 60 days.
You’ve had showings. Maybe a few open houses. People have looked, some have even complimented the property, but nobody has written an offer.
Your Realtor suggests lowering the price by $10,000.
And you’re thinking:
“I’ve already invested so much in this house. Do I really need to lower the price again?”
Maybe.
But before we automatically reduce the asking price, I’d like to ask another question:
What if we could make your home more affordable to the buyer without immediately lowering the price?
That’s where the mortgage conversation begins.
I’m a mortgage lender, not a real estate agent. I don’t determine what your home is worth, and I’m not going to pretend that financing incentives can fix an overpriced property.
But I’ve seen how the right financing strategy can change what a buyer can afford, how much cash they need at closing, and how they view a home compared with the competition.
Sometimes a price reduction is the answer.
Sometimes seller concessions deserve a closer look.
And sometimes the problem has very little to do with financing at all.
Let’s talk about how to tell the difference.
Quick Answer: Should I Lower My Asking Price if My House Isn’t Selling?
Not necessarily.
If your house isn’t selling, start by evaluating the asking price against comparable homes, recent sales, buyer feedback, property condition, marketing, and the competition.
Then consider whether a seller concession could help qualified buyers with closing costs, discount points, or an eligible temporary mortgage rate buydown.
A price reduction may help attract buyers who otherwise wouldn’t see the property in their search results. A seller concession may make the home more affordable for buyers who already like it but are struggling with the monthly payment or cash required to close.
The best strategy depends on what’s preventing buyers from making an offer.
Why Isn’t My House Selling?
Before changing the price, I’d want your Realtor to help answer a few questions.
Are buyers touring the property?
Are they scheduling second showings?
What are they saying about the condition?
Are nearby homes offering better features or more attractive pricing?
Are there concerns about the roof, air conditioning, pool, landscaping, or other major expenses?
Is the HOA affecting affordability?
Are similar homes selling while yours sits?
And perhaps most importantly:
Are buyers saying they don’t like the house, or are they saying they can’t afford it?
Those are two very different problems.
If the home is significantly overpriced compared with the competition, financing incentives probably won’t solve the issue.
But if buyers like the property and the monthly payment is keeping them from moving forward, there may be another conversation worth having.
Would a $10,000 Price Reduction or $10,000 Seller Concession Help More?
Let’s use a hypothetical example.
Your home is listed for $500,000.
A buyer is considering purchasing it with 5% down on a 30 year fixed conventional mortgage.
For illustration, let’s assume a 6.5% interest rate. This is not a current rate quote.
Option 1: Reduce the Price by $10,000
The price drops from $500,000 to $490,000.
Assuming the same 5% down payment and interest rate, the buyer’s loan amount decreases by $9,500.
That reduces principal and interest by approximately $60 per month.
Certainly helpful.
But what if that same $10,000 could accomplish something different?
Option 2: Offer $10,000 Toward Eligible Buyer Costs
Instead of reducing the price, the seller offers up to $10,000 toward eligible closing costs or financing incentives, subject to the loan program’s contribution limits.
That money might help the buyer cover closing expenses, preserve cash, or obtain a lower mortgage payment through an eligible buydown.
For example, suppose an eligible temporary 1/0 buydown is available.
If the buyer’s permanent note rate is 6.5%, the temporary buydown could provide payment assistance equivalent to a 5.5% rate for the first 12 months.
On a $475,000 loan, the approximate principal and interest comparison would be:
| Payment Scenario | Monthly Principal & Interest |
|---|---|
| Permanent note rate at 6.5% | $3,002 |
| First year with 1/0 buydown at 5.5% equivalent | $2,697 |
| First year monthly difference | $305 |
That’s approximately $3,660 in first year payment assistance, funded through the temporary buydown arrangement.
After the first year, the payment returns to the amount calculated using the permanent note rate, assuming a standard fixed rate loan.
The borrower must qualify under the applicable program requirements, generally using the permanent note rate rather than the temporarily reduced payment.
Important: A temporary buydown doesn’t permanently reduce the interest rate or make the home less expensive overall. It changes the timing of certain payments, using funds contributed upfront.
And the $10,000 seller concession isn’t automatically a $10,000 buydown. The actual cost and permissible uses must be calculated for the specific transaction.
So, Which Is Better?
That’s exactly what I want sellers and their agents to ask.
A price reduction may help the property reach more buyers, lower the required down payment, and potentially support the property’s appraised value.
A concession may help a buyer who already likes the home but needs assistance with closing costs or monthly affordability.
And sometimes the best solution is a combination.
Don’t assume a $10,000 price reduction and a $10,000 seller concession produce the same result for the buyer.
They don’t.
What Exactly Are Seller Concessions?
Seller concessions are amounts the seller agrees to contribute toward certain buyer expenses as part of the purchase contract.
Depending on the mortgage program and transaction, eligible uses may include:
- Certain closing costs
- Prepaid expenses
- Discount points
- Eligible temporary rate buydowns
- Other permissible financing costs
There are limits.
Conventional, FHA, VA, and other loan programs have different rules governing seller contributions. The maximum amount may depend on occupancy, loan to value, and other program requirements.
Concessions generally cannot simply be used as unrestricted cash back to the buyer or to fund the buyer’s required down payment.
They must also fit within the transaction’s actual eligible costs.
That’s why I recommend involving the lender before advertising or negotiating a specific financing incentive.
What if the Buyer Needs Help With the Monthly Payment?
This is where mortgage strategy can become especially valuable.
A buyer may love your house but be uncomfortable with the monthly payment.
Instead of immediately negotiating the price, the Realtor and lender could evaluate several options.
Permanent rate buydown: Eligible funds are used to obtain a lower note rate. Whether the upfront expense is worthwhile depends on the pricing and how long the buyer expects to keep the mortgage.
Temporary rate buydown: Eligible funds subsidize part of the payment for a defined initial period. The note rate remains unchanged, and the buyer must qualify under the applicable requirements.
Closing cost assistance: A seller concession may help the buyer preserve savings by covering eligible transaction expenses.
Price reduction: A lower purchase price can reduce the loan amount and may make the property accessible to a different group of buyers.
There isn’t one financing strategy that’s automatically better for every buyer.
We need to understand what the buyer is trying to accomplish.
What if the Buyer Has Enough Income but Not Enough Cash?
This is another scenario sellers sometimes overlook.
Maybe the buyer can comfortably afford the monthly payment but is struggling with the amount required at closing.
A $10,000 seller concession toward eligible closing costs could potentially make a greater immediate difference than reducing the price by $10,000.
With a 5% down payment, a $10,000 price reduction would lower the buyer’s down payment by only $500.
The lower loan amount would also reduce the monthly principal and interest payment, but it wouldn’t necessarily solve the buyer’s cash to close challenge.
In contrast, eligible closing cost assistance could potentially preserve thousands of dollars the buyer would otherwise need at closing.
That doesn’t make concessions universally better.
It means we need to identify whether the buyer’s problem is monthly payment, cash to close, or the total price.
What if the Home Needs Repairs?
Sometimes the financing conversation isn’t the biggest issue.
Maybe buyers are concerned about an aging roof.
Maybe the air conditioning is near the end of its useful life.
Maybe an inspection uncovered electrical, plumbing, or other issues.
Or maybe buyers simply don’t want to purchase a home that requires substantial work immediately after moving in.
This is where I would encourage sellers to speak with their Realtor and a qualified repair professional before making decisions.
Would completing a few important repairs help?
Would an appropriate price adjustment make more sense?
Are any issues likely to affect financing, insurance, or appraisal requirements?
A seller concession can’t necessarily solve a property condition issue that prevents the loan from closing.
I recently discussed this subject with Kris Forbes of The Fixory in my Professional Perspectives article, The Inspection Came Back. Now What?
One of my favorite lessons from that conversation was the importance of understanding what actually needs to be repaired rather than assuming everything needs to be replaced.
Sometimes a relatively small repair can remove a significant buyer objection.
Could the HOA Be Keeping Buyers Away?
Let’s talk about another issue that doesn’t always get enough attention.
Homeowners association fees.
A $500,000 house with a $75 monthly HOA and a $500,000 house with a $400 monthly HOA don’t have the same monthly ownership cost.
That’s a $325 difference before we even consider property taxes, insurance, or mortgage financing.
For a payment-sensitive buyer, that can matter.
And the problem can be even more pronounced with condominiums and townhomes, where HOA dues, insurance arrangements, special assessments, and project eligibility may affect affordability or financing.
Buyers don’t live in the asking price. They live with the monthly payment.
That’s why I encourage buyers and sellers to look at the entire cost of ownership.
Should I Offer a Buydown Instead of Lowering the Price?
Maybe.
But let’s not advertise a buydown simply because it sounds attractive.
A temporary buydown may be useful when a buyer needs some payment flexibility during the first year or two, provided the program permits it and the buyer qualifies at the required rate.
A permanent buydown may be more attractive to someone who expects to keep the mortgage for many years.
And a price reduction may be more effective when the home simply isn’t competitive at its current asking price.
The answer depends on the available financing, the cost of the incentive, and the buyer’s priorities.
A good financing incentive should solve an actual problem, not just make the listing description longer.
Realtors: Let’s Have the Financing Conversation Earlier
This is something I’d love to see more often.
Instead of waiting until a listing has been sitting for 90 days, why not have the conversation before it goes on the market?
What financing programs might be available to qualified buyers?
Would an eligible seller concession make the property more competitive?
Could a temporary buydown be useful?
Are there property features that might create financing challenges?
Could we prepare a few illustrative payment scenarios for interested buyers?
And what is the competition offering?
I’m not suggesting every seller should automatically offer concessions.
I’m suggesting that understanding financing options can give the seller and Realtor more tools when developing a marketing strategy.
Price is one lever. Financing is another. Property condition is another.
The right combination depends on the property.
Sometimes the Answer Really Is Lower the Price
I want to be very clear about this.
If your home is overpriced, financing incentives aren’t a substitute for a realistic asking price.
If comparable properties are selling for less, buyers may simply have better options.
If the home isn’t receiving showings, a price reduction may help it appear in additional buyer searches.
And if an appraisal doesn’t support the agreed purchase price, a seller concession doesn’t automatically fix that problem.
A seller should evaluate net proceeds, not just the advertised sale price.
For example, selling at $500,000 with a $10,000 concession may produce similar gross proceeds before other expenses to selling at $490,000 without that concession.
But the financing, appraisal, buyer eligibility, and contract terms may make one structure more practical than the other.
The goal isn’t to protect the listing price at all costs.
The goal is to help the seller achieve the best realistic outcome.
Before You Lower the Price, Ask These Five Questions
- Is the home priced competitively against comparable properties?
- Are buyers objecting to the property itself, or to the total cost of owning it?
- Would an eligible seller concession address a real buyer affordability concern?
- Would repairs, presentation, or marketing changes improve the home’s appeal?
- What strategy gives the seller the best realistic net proceeds while attracting a qualified buyer who can close?
These questions should involve the seller, Realtor, and mortgage professional working together.
Because the solution isn’t always one person’s decision.
The Bottom Line
My house isn’t selling. Should I lower the price?
Sometimes.
But don’t assume a price reduction is the only available strategy.
Maybe the property needs repairs.
Maybe the competition is priced better.
Maybe the HOA is affecting affordability.
Maybe the buyer needs closing cost assistance.
Maybe an eligible temporary or permanent buydown would help.
And sometimes the right answer is a combination of price, condition, and financing.
The important thing is to identify the actual obstacle before deciding how to solve it.
Don’t just ask what the home costs. Ask what it costs the buyer to own it.
That’s a conversation worth having before the next price reduction.
Frequently Asked Questions
Should I lower my house price if it isn’t selling?
Not automatically. Start by reviewing comparable sales, current competition, showing activity, buyer feedback, and property condition with your Realtor. If the home is overpriced, a reduction may be necessary. If buyers are struggling with financing or closing costs, an eligible seller concession may also deserve consideration.
Is a seller concession better than a price reduction?
It depends on the buyer’s needs and the property’s pricing. A price reduction lowers the purchase price and may attract more buyers. A concession can help cover eligible closing costs or financing incentives. Compare the buyer’s benefit, program rules, and seller’s estimated net proceeds before deciding.
Can a seller pay to lower the buyer’s mortgage rate?
Potentially, yes. Depending on the mortgage program and transaction, eligible seller contributions may help pay discount points for a permanent rate reduction or fund a permitted temporary buydown. Contribution limits and other requirements apply.
How much does a $10,000 price reduction lower a mortgage payment?
On a 30 year fixed mortgage at an illustrative 6.5% rate, reducing the loan amount by $10,000 lowers principal and interest by approximately $63 per month. The actual change depends on the down payment, loan amount, rate, mortgage insurance, taxes, and other factors.
Can seller concessions help with closing costs?
Yes. Eligible seller concessions can often help cover certain buyer closing costs and prepaid expenses, subject to loan program limits and transaction requirements. They generally cannot be used as unrestricted cash back or simply replace the buyer’s required down payment.
Will offering a mortgage rate buydown help my house sell?
It may help attract qualified buyers who are sensitive to monthly payments, but it doesn’t guarantee a sale. The incentive must be permitted by the loan program, accurately explained, and appropriate for the buyer’s needs. Competitive pricing and property condition still matter.
Why is my house getting showings but no offers?
Possible reasons include asking price, condition, layout, location, HOA costs, competition, financing concerns, or buyer expectations. Your Realtor can evaluate showing feedback and comparable listings to help identify the most likely obstacles.
Can I offer a seller concession if the buyer uses a VA or FHA loan?
Often, yes, subject to the applicable loan program’s rules. FHA and VA loans have specific requirements governing eligible seller contributions and concessions. The lender should review the proposed terms before the seller and buyer rely on them.
Thinking About Selling Your Home?
If your property has been sitting on the market and you’re wondering whether another price reduction is the answer, I’d be happy to work with you and your Realtor to explore the financing side of the equation.
We can look at illustrative payment scenarios, eligible seller concessions, temporary or permanent buydowns, and what those options might mean for a qualified buyer.
Sometimes the right answer is a price reduction.
Sometimes it’s a financing strategy.
And sometimes it’s both.
Let’s run the numbers before making the decision.
Mortgage Guidance. Not Mortgage Pressure.
Doug Caldwell | Executive Loan Officer | Rocket Mortgage, LLC | NMLS #1697500
Educational examples only. Interest rates, payment scenarios, seller contributions, buydown availability, loan qualifications, and financing terms vary by program and borrower. Examples exclude property taxes, homeowners insurance, mortgage insurance, HOA dues, and other costs unless stated. Seller contributions and all financing are subject to applicable requirements and approval. Consult your real estate professional regarding listing price, property value, marketing, and negotiations. Rocket Mortgage, LLC, NMLS #3030. Equal Housing Lender.
