Your home is listed at $1,000,000, and you're contemplating a price reduction — say, $20,000. Maybe the showings have slowed, maybe your agent suggested it, maybe you're just watching the market and wondering if that's what it'll take.

Before you lower your price, consider this: offer a 2-1 buydown instead. It could get a hesitant buyer to say yes, without touching your price. It's also one of the concessions more sellers are turning to, in order to entice a larger pool of potential buyers.

What Is a 2-1 Buydown?

A 2-1 buydown temporarily lowers a buyer's mortgage interest rate by two percentage points in the first year, one percentage point in the second year, and returns to the original full rate in the third year.

Here's What That Looks Like

Let's do the math both ways.

If you did a $20,000 price reduction, the new listing price would be $980,000. If a buyer offers the full asking price and puts 20% down, that's a $196,000 down payment — leaving a loan of $784,000. At, let's say, 6.5%, that brings the monthly payment down by about $100. Nice, but not exactly life-changing.

Now let's look at the buydown. The listing price stays at $1,000,000. The buyer offers the full asking price and puts 20% down — $200,000 — leaving a loan of $800,000. Put that same $20,000 toward a 2-1 buydown instead: in the first year, the rate is 4.5%, and the monthly payment drops by roughly $1,000. In the second year, the rate is 5.5%, and the payment drops by about $515. By the third year, the rate is the full 6.5% for the rest of the loan.

What Makes This Work

One detail worth knowing: at the time of purchase, your buyer has to prove they can afford the full payment at 6.5%, not the discounted one — that's what the lender bases their approval on. Because of that, the lender isn't taking on extra risk by offering the buydown. It only changes what your buyer pays each month for the first two years, not what they qualify for.

A 2-1 buydown isn't something you spring on a buyer after the fact — it's negotiated into the deal, either offered upfront when you list, or agreed to during escrow. Either way, the money moves the same way: your funds are deposited into an escrow account at closing, and your buyer's lender draws from that account each month for the first two years to cover the difference between the discounted payment and the real one.

And because it's a negotiated concession rather than a fixed rule, it works best advertised upfront — right in the listing, where every potential buyer sees it.

For the Buyer

It buys them time. Two years to grow into the full payment — a raise, a promotion, maybe rates ease enough to refinance — before the third year brings the full rate.

For the Seller

The sale price stays at $1,000,000. A $20,000 buydown isn't reflected in the list price — it's a credit at closing, invisible to anyone browsing the listing. A $20,000 price reduction isn't — it's public, and too small to meaningfully change the monthly payment, but still large enough to make a buyer wonder what's wrong with the house — and start looking for room to negotiate even lower.

A buydown is a tangible, immediate benefit for the buyer: a noticeably lower payment, starting the day they move in.

Is This Right for You?

This isn't a strategy for every seller. But if your home sits in a neighborhood where buyers have more options to choose from, a 2-1 buydown is worth having in your back pocket — a way to stand out against the competition without touching your price.

Market conditions can vary from neighborhood to neighborhood here in North County San Diego. Your street in Carlsbad, Encinitas, or Oceanside might favor sellers, while a few streets over favor buyers. Knowing which situation you're actually in is worth a conversation with your agent before deciding if this makes sense for you.