December 10, 2025: Market Normalization and Using Seller-Funded Buydowns in Spokane County

We are tracking the major shifts in our Washington housing market archive, specifically looking at how transactions are moving in late 2025. Over the last few months, the frantic bidding wars of the early 2020s have faded, replaced by higher inventory, longer times on market, and sellers who are finally willing to negotiate.

Instead of just asking for a lower purchase price, smart buyers are using their new leverage to restructure the deal entirely. Getting the seller to pay for your upfront financing costs can make a much larger difference in your budget than chipping ten thousand dollars off the listing price. This update is part of our ongoing archive at historical market summaries, mapping how local conditions change for consumers.

Spokane and Liberty Lake Market Shifts

Over in eastern Washington, the local market in Spokane County shows exactly how this transition is playing out. In spots like Liberty Lake, the inventory mix includes single-family suburban homes, newer master-planned communities, and properties with homeowners association rules near the water. When inventory builds here, listings that sit for more than a few weeks face a choice, and buyers are no longer waiving their inspection contingencies just to get an offer accepted.

Sellers in these neighborhoods are adjusting to the reality that homes are not selling in twenty-four hours. High HOA dues on certain townhomes or properties near the lake, combined with winter utility expectations, mean buyers are highly sensitive to their total monthly cash flow. This makes Liberty Lake an ideal testing ground for choosing structural payment assistance over a simple price cut.

The Math of Seller-Funded Buydowns

When you find a home that has been sitting on the market, your first instinct is probably to offer less than the asking price. But if you cut the price of a home by ten thousand dollars, it only reduces your mortgage payment by a small amount each month. If you instead ask the seller to contribute that same ten thousand dollars toward a temporary interest rate buydown, your savings during the first year are significantly higher.

Under this structure, the seller funds an escrow account that subsidizes your payment. For example, with a standard two-to-one temporary buydown, your starting interest rate is two percent lower for the first twelve months, then one percent lower for the second year. To see how these payment differences impact your bottom line, you can estimate your home buying budget and adjust the interest rate input down by one and two percent to compare your actual monthly costs.

Using ARMs to Maximize Flexibility

Temporary buydowns are not the only way to manage your payment when rates are high. Buyers are also looking closely at hybrid adjustable-rate mortgages to establish a lower initial payment. An ARM typically offers a fixed interest rate for the first five, seven, or ten years before it begins adjusting annually based on market index movements.

Pairing a seller concession with an ARM allows you to secure a lower starting payment than a traditional thirty-year fixed loan. This strategy works well for buyers who plan to sell the home, pay off the loan, or refinance before the initial fixed period ends. It keeps your monthly overhead manageable during those critical first few years of homeownership when other moving and maintenance costs are highest.

Key Steps in Negotiating Financing Concessions

When negotiating a structure that involves seller credits, you have to follow a specific sequence to protect your earnest money and secure the financing.

• Include a clear seller concession addendum in your initial purchase contract that specifies the dollar amount or percentage the seller will contribute.
• Work with your loan officer to ensure the total seller credit does not exceed the maximum concession limits allowed by your specific loan program.
• Specify in the contract that the funds are to be applied to temporary rate buydown fees or permanent discount points.
• Complete a thorough home inspection to identify any safety issues, then use the seller's willingness to negotiate to address those repairs through closing cost credits.
• Compare your official Loan Estimate side by side to ensure the lender has properly applied the credit to cover your transaction costs.

Questions I get about this

**Q:** Can I use a seller concession to cover both my temporary buydown and my standard closing costs?

**A:** Yes, you can use seller credits to cover a wide range of closing costs, including lender fees, escrow charges, title insurance, and prepaying your initial tax and insurance escrow accounts, as long as the total credit stays within the program guidelines. Conventional loans, VA loans, and FHA loans all have different caps on how much a seller can contribute based on your down payment percentage, so we must check those limits before writing your offer.

**Q:** What happens to the money in the buydown escrow account if I decide to refinance early?

**A:** If you refinance your loan before the temporary buydown period ends, any remaining funds left in that subsidized escrow account are not lost. Instead, that unused money is typically applied as a direct reduction of your principal balance when the old loan is paid off, meaning you still get the full benefit of the seller's contribution.

Dom's take, written December 10, 2025

Designing mortgage structures got much easier this month because we finally broke free from the hectic bidding wars that forced buyers to waive every protection. Genuinely fun again. I got to tell buyers to inspect the house, ask for a credit and mean it. Rates were still high compared to 2021, and it was still a great moment to get closing costs and a buydown paid for.

Helping Spokane buyers evaluate these programs meant putting together real, customized comparisons rather than just pushing files through. It came down to a simple choice at the end of the year between sitting on the sidelines hoping for a minor price drop or stepping in to make the seller pay for your payment relief.

What I'd say now (August 2026)

Looking back with hindsight, I was right about prioritizing the structure of the deal over the list price. Since that winter, we have watched the Washington housing market move toward something closer to balance, with real negotiation, real inspection periods, and standard financing adjustments. The buyers who secured seller-paid buydowns protected their monthly budgets immediately instead of waiting for a market shift that has not arrived.

What has become obvious is that financing structure, points, buydowns, and program choice drive the monthly payment more than list price does. If you focus entirely on shaving off a few thousand dollars from the purchase price while ignoring the loan structure, you miss the actual mechanics that determine your bank balance every single month.

Talk it through with me

If you are ready to explore your options and find the right structure for your next purchase, contact me directly to map out your scenario. We can run through a pre-approval in about five minutes, and my team regularly gets purchase loans cleared to close in fifteen days or less.