Posted by Dr. B. (OH) on September 17, 2009 at 18:47:19:
Lu
You and I may think it is a great home and at a great price.
I’m seeing some fallout from the economy in terms of layoffs, etc. Currently getting a number of homes back, mostly from sporadic payers. My lawyer friend has seen an increase in upper mgmt layoffs (he practices business law).
As you may know, trends tend to hit the Midwest last, so if we’re seeing it (finally), you are living it.
All that is leading up to what seasoned investors often say: It is either your price or terms that are holding back the sale. Let’s face it, if you were selling your home for $500 with $25 down it would sell mighty quick, no?
At times I’ve sold a typical $12,000 home in my market for $8900-9900 just to get it moved and a payment coming in. Sometimes I have lowered my DP from $1000 to $750, even $500 if I can get someone in who has a pretty steady monthly income (read: SSI, disability, ADC, etc. a la Ryan).
My data shows that I get 40% of these homes back anyway. So think of it this way. I have “lost” money on the initial sale by lowering my sales price. On the other hand, 40% will re-sell at the same, similar, or higher price, another DP and another note. If you string these repeat notes together, you will see you’ve made back far, far more than your “lost” money on initial sales.
Steve