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Dr. Kalinda Rose Stevenson
Make More Money By Selling At A Discount
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Even though it seems counterintuitive, you can often make more money by selling at discount now than you can by waiting for a better price. This is based on the concept of 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.
After a while, the first PRICE REDUCED signed appeared in front of the house. This was the beginning of a long and steady decline.
$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.
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.
Add to that, the seller paid mortgage, taxes, insurance, and maintenance on a vacant property for more than a year. The question then becomes: How much did the seller lose because the seller wouldn’t 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.
As a matter of strategy, there is a much better solution. If the seller had agreed to owner finance, it is very likely that the house would have sold a year earlier than it did. What is even more ironic is that the real estate agent would have earned a higher commission. The moral of this story is that simply reducing your asking price is not the best solution. You owe it to yourself to find out why owner financing is a better strategy than reducing prices.
by Kalinda Rose Stevenson, PhD
Learn why owner financing is the safest way to increase profit, sell quickly, and increase cash flow. Think differently about money with No Money Limits.
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