A seller countered $20,000 above asking because the buyer wanted to assume a 2.25% VA loan. How would you value that?
I work in mortgage assumption processing, and I’m interested in how buyers, sellers, and agents are putting a dollar value on assumable financing.
A recent situation, with rounded numbers:
Home listed at $785,000.
Buyer offered full asking price with no concessions.
Existing VA loan balance was approximately $725,000 at 2.25%, with roughly 24 years remaining.
Buyer was a non-veteran, so the seller’s used VA entitlement would remain tied to the loan.
Seller countered at $805,000.
The buyer was understandably frustrated: “I offered what they asked. Why are they asking for another $20,000?”
We slowed down and compared the financing options. At the original price, the gap between the price and loan balance was approximately $60,000. At the counter price, it became $80,000, before closing costs.
The low rate offered substantial potential savings. But whether those savings justified the extra $20,000 depended on the buyer’s alternatives, available cash, and how long they expected to keep the loan.
That left me with a bigger question: where did the $20,000 come from?
Was it compensation for the seller keeping entitlement tied up? A negotiated share of the buyer’s financing savings? Or simply a number the seller wanted?
I also rarely get to see the competing offers. If a seller accepts an assumption offer, what were buyers using new financing offering? Were their prices lower? Were they asking for concessions? How did closing timelines affect the decision?
For anyone who has bought, sold, or represented a property with an assumable loan:
How did you determine the premium, if any—and what actually happened in the negotiation?
I’m especially interested in examples with competing offers. What would a useful tool need to account for to estimate the financing advantage without overstating what it adds to the property’s market value?