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One of the hardest concepts to grasp is why you can make more money by selling at a discount now rather than waiting to get a better price. The reason concerns the time value of money. Here's an example. Last year, a real estate agent listed a property down the street from where I live for $950,000. That price was obviously too high, and the house remained on the market for more than a year. PRICE REDUCED was added to the sign in front of the house. Then the prices started to go down, slowly and steadily as the house didn't sell. $950,000, $929,000, $899,000, $869,000, $849,000, $799,000, $780,000, $760,000, $739,000, $725,000 Early in the decline, my husband wrote a letter to the seller asking if the seller would sell the property by carrying a note. In other words, he asked if the seller would owner-finance. The real estate agent strongly advised the seller not to owner finance because it would mean taking a discount on the property. Finally, a SOLD sign appeared. By this time, the asking price had been reduced to $725,000. Considering that the original price was $950,000, the difference was $225,000. This is a quarter of a million dollars. And this assumes that the buyer was willing to pay the full $725,000. 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? When times are tough in real estate, the common solution is to do what the real estate agent advised the seller. Keep reducing the price until someone finally buys. 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.realestateinvestmentarticles.net
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