Home buyers don’t want your house.
Most homebuyers want a home to live in and make a life in. That may be your house, but not if it costs them more to live there than they’ll get out of it.
So, in a market like the one we have in Arizona right now, how is a home buyer supposed to sell their home with high interest rates and high housing costs?
A lot of agents are urging their sellers to offer a 2-1 buydown to help ease buyers into their properties. This might seem like a good idea, but there is a better, easier way to not only sell your home but to get more money out of your property, too.
What is a 2-1 buydown?
A 2-1 buydown means that the seller of a home helps pay the interest rate on a new mortgage to buy their property by 2% the first year and 1% the second year. That way a buyer of your house doesn’t have to pay their full interest until year three.
The idea here is that if you help a buyer pay for their interest from the bank, they’re more likely to buy from you. But a buydown like that only helps for two years; people still have to pay the rest of the interest rate for 28 years after.
A tactic like this doesn’t actually help people to afford homes in the long run, and it takes money away from sellers. So what’s a better way to make homes more affordable and make sure sellers get their money right now without having to change the economy?
Selling using creative financing to make more money.
I keep saying creative financing is the only way to get things done in this economy, and now sellers are seeing that’s true, too.
If you’re selling your home, there’s no incentive for someone to go to the bank and pay you completely outright. Why would people want your house more than someone else's when there are plenty of homes on the market just sitting there?
Now, if you worked with home buyers instead of seeing it as an “us versus them” game, you’d make more money and your buyer would be paying less.
Sounds too good to be true right?
Well, it’s just easy math. If you’re willing to offer your home through a creative financing technique like owner financing, you won’t make a big payday up front – that’s true.
But by acting as your buyer’s bank, you can work with your buyer to find an interest rate that works for both of you. Even if that’s as little as 2-3%, you make all that money off interest instead of a bank. That’s an extra 2-3% on housing prices around $400k, or $8-12 thousand dollars more in your pocket.
That’s still less money in interest than your buyer would normally pay to own a home from the bank, so they pay less and you get more. It also means that buyers won’t try to haggle the price of your home down, and you can actually get the asking price.
It’s a win-win.
And it means you get what you want and get to help a buyer. But it also means that a buyer is helping you sell.
It goes right to the core of what we do and believe in the SubTo community: money means nothing unless we’re working together and helping other people.
And it’s what you could be doing with us if you joined the SubTo community to learn more about how to help other people and make more money.