How to Sell Your Home When Interest Rates are High

How Sellers Can Combat Higher Interest Rates & Get Their Home Sold

Brokers, Sellers Get Creative to Help Home Sellers Combat Higher Interest Rates & Compete with New Construction

Interest Rates just shot up again and are currently at 6.72 percent, up from historic lows and more than double what they were earlier this year when interest rates hovered around 3%.

As a result, homes are sitting longer and price reductions have become commonplace, with Dallas County seeing a slash of 15% off the average home price just since May of this year. However, average home prices are still up 10% overall since this time last year.

Buyers today faced with these higher interest rates, in addition to above average price appreciation, have backed off significantly creating a market that has basically stalled out in terms of homes under contract and buyer purchase activity. Which means, home sellers are seeing their homes sit much longer and as a result, are decreasing the price on a sometimes weekly basis to get the home sold.

So how do we as brokers, agents and sellers counter this higher interest rate environment to get the deal done? While also competing with builders of new construction homes? Well, there are a few strategies we as brokers can utilize. It just takes knowing these methods and then educating your sellers on the benefits of these approaches in a shifting market.

Strategy 1: Owner Finance

What many sellers do not realize, is they have the option to “Owner Finance” and offer an interest rate of say, 4.5 percent to buyers. How does this work?

Ideally, you will need the buyer to be able to put at least 20 percent down (as there will still be closing costs and broker fees to pay at the end of the transaction). But you set up the note and deed through title, with the note assigning the terms to be on a 30-year amortization schedule and the term of the note due at the end of say, five years. We would not recommend the seller carry a note more than five years and ideally two to three years.

Under the five-year scenario, the buyer will then pay the seller their monthly payments for those five years (and the seller will even get to collect that extra bit of interest money as well, no small chump change).

Then, at the end of five years, the buyer will refinance through an institution (at an interest rate likely to be much lower than what we are faced with today), or they can even refinance through the owner by extending the note.

Sellers can offer this option up in the “Private Remarks” section on the MLS. This will help to entice buyers and their agents with a lower interest rate in a market where prices remain high and interest rates are pricing more and more people out of the market.

Here’s an example of what an owner/seller has to gain utilizing this method to get their home to sale, as well as what a buyer stands to gain by going this route, too.

Example of Benefits to Home Seller & Buyer

  • Home Loan Amount: $500,000
  • Amortization Schedule of 30 Years, at 4.5% Interest Rate:
    • Buyer Monthly Payment is $2,533.43
    • Buyer is now paying $626.91 less per month on their home payment than they would have with a 6.5% interest rate
  • Total Interest Collected By Seller on Top of Sales Price? $107,795.17

Strategy 2: Reverse Offer

Another strategy brokers and sellers are utilizing to get a home under contract is known as a “Reverse Offer.” Agents for home sellers can view which agents have shown the home to interested buyers using a tool called Showing Time. Then, the seller’s agent can reach out and contact the buyer’s agent for feedback. And using that feedback, the seller’s agent then makes what is known as a “reverse offer” to the home buyer.

A good example of this might be a buyer that loved the home except they really do not want carpet in the bedrooms. In this case, the seller’s agent would send the buyer’s agent a reverse offer taking around $3,000 off the price for the buyer to update flooring.

Another instance might be a buyer that loves the home but wants a pool. In this instance, the seller would send an offer to the buyer taking off $20,000 to 30,000 so the buyers can put in a new pool.

The idea of this strategy being – you’re likely going to end up doing a price reduction, so you might as well get a contract on the home in the process. Especially if you have interested buyers only put off by small to medium changes to the house. 

Strategy 3: Seller Buys Down Buyer's Interest Rate

Utilizing this strategy entails the seller putting into the contract  that they will pay X amount towards closing costs to “buy down” the buyer’s interest rate.

All lenders are different. But using the example of our preferred lender at M&D Real Estate, it costs about 3% of the home purchase price to buy down the rate 1%. The amount paid by the seller at closing essentially goes towards the buyer’s down payment, lowering the buyer’s payments significantly.

Example Case:

  • Home Price: $500,000
  • Seller Buys Down Rate 1%, Costing the Seller $15,000
  • Buyer Monthly Payment Goes From $3,160.34 to $2,838.95


Generally, the max amount an interest rate can be bought down is 2%. This would equate to the seller paying 6% of the home purchase price on a 20% loan.


Are these scenarios typical? Not necessarily, but they can be an ingenious way to get a home sold for the agent and seller who know how to adapt in a changing environment. This shift has created a tough market for both buyers and sellers. 

But by getting a little creative, it’s still possible for sellers and agents to construct a win-win situation that gets the home sold and the buyers a lower payment, even in this higher interest rate environment.

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