I often tell sellers that the only way to get their price is to offer terms (owner financing). Sometimes it’s the only way to get a property sold for anything at all, but even that strategy may be weakening.
A survey conducted by Harris Interactive for the National Apartment Association in May 2010 found that 76% of those surveyed now believe that renting is a better option than buying in the current real estate market, up from 71% in 2008. Especially sobering was the fact that 78% of those surveyed were homeowners.
Here’s how one weary homeowner put it:
“We cannot wait to rent and walk away from this upside down/underwater bad investment. And while we go through the process (foreclosure) 6 to 8 months, we will be socking away the $2600+ mortgage payments preparing for our rental. Even $1500.00 for the rental of a home as nice or even nicer is going to be $1100.00 per month up ahead.
Just think, no property taxes, no HOA dues and when something goes wrong, call the landlord. We can handle the credit hit. Currently we have about 840 FICO. The way things are going we will be able to save enough cash to just buy a house in a few years.”
Zillow‘s latest Homeowner Confidence Survey for this year’s second quarter reported that one-third of all homeowners do not believe that home prices have reached a bottom.
I pulled these references from Keith Jurow over at Real Estate Channel.
So, more and more, people are leaning towards renting (believing that rents will be softening) while they save their money and watch real estate prices fall to the point that they can comfortably buy for all cash.
With this kind of mentality growing among the masses, it doesn’t behoove property sellers to be casual about any offers they receive. They should think long and hard before ignoring an offer that is “only” 10-15% less than they wanted.
Unless you are comfortable carrying paper (offering terms, owner financing), you may not to be able to do much better than that, and even then, there are no guarantees.