Many Realtors around the country are facing the same problem - how to get buyers off the fence and commit to buying a home!
I have had more luck recently conceding that prices may in fact keep dropping a little, but am able to show my clients why it can still make sense to buy now! For example, stock brokers quit aspiring to help you buy low and sell high since they were always getting beat up for not buying at the lowest and selling at the highest! They started telling their clients to just "buy now and sell higher later" so they wouldn't get blinded with hindsight later.
For example, here are two scenarios:
- $250,000 mortgage today @ 5% =
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Monthly Payment:
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$1,342.05 (Principal & Interest ONLY)
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- If your buyer thinks the property values will decline 5% more in the next year, just agree with them! Then the mortgage would be $237,500 instead of $250K. Because you agreed with them that things are still eroding, they might agree that interest rates will go up due to additional economic concerns so figure the same house at the reduced mortgage but increasing interest rates to 6%. $237,500 mortgage at 6% =
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Monthly Payment:
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$1,423.93 (Principal & Interest ONLY)
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Therefore, by waiting for prices to drop another 5% due to the economy and if interest raise only 1% your effective payment is going to increase $81.88. The effect of the payment increase will drop your buying power by roughly $13,500 at 6% so you wouldn't even be able to buy as nice a home!
Oh by the way, if you don't close by November 30th of this year, you also loose the potential $8k First Time Tax Credit!
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Great Info!