Why Now Is The Best Time To Sell With Owner Financing

The time value of money demonstrates why you can make more money by selling sooner at a discount than waiting to sell at a higher price. At first, this concept might be difficult to understand.

This is an example of the time value of money at work. Last year, a real estate agent listed a house in my neighborhood for $950,000. Even at the time, that seemed like much too high a price for the immediate area. For more than a year, the house stayed on the market.

The house didn't sell. Then the first PRICE REDUCED sign appeared and the steady decline started.

$950,000, $929,000, $899,000, $869,000, $849,000, $799,000, $780,000, $760,000, $739,000, $725,000

As soon as the prices started to go down, my husband wrote a letter to the seller. He asked if the seller would be willing to take a note to sell the property. In other words, he asked if the seller would be willing to owner-finance.

However, the real estate agent advised the seller that it would be a mistake to owner finance, because the seller would have to take a discount on the price of the property.

After more than a year on the market, a SOLD sign finally appeared in front of the house. At this point, the seller's asking price has gone down from the original $950,000 to $725,000. Even if the buyer agreed to pay $725,000, the difference between the original listing price and the final listing price was a quarter of a million dollars, $225,000 to be exact.

While the house was unsold, the expenses on the property continued. The seller had to make mortgage payments, pay taxes and insurance, and maintain a vacant property for more than a year. This leads to an important question: How much of a discount in price did the seller take because the seller was unwilling to discount a note?

The strategy the real estate agent advised is the typical solution for tough times. Keep lowering your price, until someone will buy.

There is a much better solution. If the owner had agreed to owner finance, by carrying a note, the seller could have sold the house at least a year earlier, for a much higher price. And the real estate agent would also have earned a higher commission. Before you agree to lower your asking price again and again, find out why you'll come out ahead by owner financing.

Article Source: http://www.share.onlypunjab.com

Why owner financing is the safest way to increase profit, sell fast, and increase cash flow. Find out how to think about money with No Money Limits.

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