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January 17, 2011 09:25 PM

Do you have Sellers who are waiting for the market to come back to sell their homes and investment properties? Do they sigh over the market value of their homes in comparisons with the highs of 2005!

I have found that sitting down with paper and pen and truly discussing the expenses and the TIME VALUE OF THEIR MONEY most helpful.

Time Value of Money is used in all types of financial discussions and for way too long in my opinion Real Estate has not been included in those financial discussions.

A seller may be $10,000 apart with their asking price or countered offer with a Buyer. $10,000 is alot of money to all of us — so we can understand their concerns. If we can diagram for the Seller where that $10,000 really is and what it represents to them, especially those Sellers with equity or who have already secured other housing and what it means to them, discussions usually flo -

So we are $10,000 apart in Seller vs Buyer pricing. The scenerio is the Seller will be realizing even at this sale price a $300,000 equity out upon the sale of the home. Should that Seller have $300,000 in his/her hand they may have different uses but all have financial value.

Money in your hand today is worth more than waiting another year or two!

Without even taking into account inflation, $300,000 deposited today in an investment or account with a typical return of 5% equates to $315,000 next year this time.

We have not found the magic crystal ball to predict into the future to determine if pricing of homes in our specific areas, will stay the same, go up or continue to suffer from depreciating values in many areas.

In our scene we are going to anticipate that values remain unchanged.

Along with the additional interest which will be realized.

The Seller will not be paying property taxes estimate $5000.00

The Seller will not be paying insurance estimate 1600.00

The Seller will not be paying for lawn maintenance, snow removal

general maintenance issues and of course the per chance event of

furnace failing, roof leaking, septic failing and more. conservative estimate 2000.00

utilities for the property, heating, cooling, water/sewer etc

conservative estimate 4800.00

not to mention less commission, tax stamps, etc

conservatively $13,400 in one year

So let’s see we are $10,000 apart in January 2011 but come January 2012 where will your seller be

without risk to the present equity in the property possibly declining — with about $28,400 estimate

of created positive cash flow from accepting todays offer, the seller may be ahead about $18,400

dollars even with taking the $10,000 less for the offer.

Sometimes people just have to sit and think about the figures they are really talking about and let them exercise on paper.

This may not work for all sellers but for a good number of sellers they will see how the equity in their property can work for them upon the sale even in a depressed market.

Time we as Realtors began to think of the true value of money in assisting our Sellers or Buyers. We will always encourage them to take this information to a qualified financial advisor or legal counsel to determine their tax implications and planning stratedgies.

Time is Money and Money is Even More Money in Time!

If you would like to discuss this further please do not hesitate to call on me at our Norwell office, 124 Washington Street or Plymouth Massachusetts office at One Court Street. Rt 3A. TradeWinds Realty Group LLC is a residential and commercial real estate marketing and sales company servicing the southshore of Boston and the Globe.

Regards

MaryBeth Mills Muldowney

Founder and President TradeWinds Realty Group LLC