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Alison Hillm…, Other/Just Looking in San Francisco, CA

How do you "sell ownership" when it isn't cheaper in the short term?

Asked by Alison Hillman, San Francisco, CA Thu Apr 11, 2013

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Home Ownership is an ingrained value of our culture. That said, I am very clear that it's not for everyone so I don't try to 'sell ownership.' Owning can indeed be ore expensive than renting and I make that clear to my clients.

Instead of selling home ownership, I point to the positive side of home ownership which I think is stability. You have some measure of control over your own home environment and are not living at the whim of a landlord. Home ownership is really about life ownership - being a part of a neighborhood and community, putting down roots.

Home Ownership is often about a stage of life when you want to raise a family, and be in a neighborhood with others that you interact with.

In the end, I believe home ownership is not about money. It's about a lifestyle choice.
0 votes Thank Flag Link Thu Apr 11, 2013
Let's do some quick math.

Home ownership is cheaper. A lot cheaper.

If renters are paying 200 more a month in rent than they would on a mortgage, that adds up to $7,200 over three years - which is not short term but it is fairly quick. That's a down payment for some mortgages.

Let's do a few more exercises, class. Shall we?

I pay on average about $5 for a can of coffee. I sometimes add Starbucks into the mix, but you can get a coffee fix for pennies. What does that amount to? That's $60 versus $1,300. You give up Starbucks and a few treats, you've essentially paid yourself a non-taxed $3,720 over three years.

Over a three-year period, a prospective homeowner can save thousands. But the buyer has to sit down with a piece of paper and go over an analysis for themselves. It's a great exercise that in the minimum places the buyer on a path to budgeting and living within their means.

As others have noted, if you're buying because that will save you money, don't miss the intangibles. Homeownership represents stability, roots, nice neighborhood and life-long friends. Living on a quiet street with kids playing in the yard is a picture most enjoy. Porch swings and lovely evenings just enjoying the your back yard ...

A prospect who has not performed the analysis for themselves is not a good prospect. Someone who is disciplined and has their eye on that prize is the better customer. In Longmont, CO, you will be lucky if you can find a home. I rarely come across someone who is not interested in eventually owning.

As rents head higher, the math is compelling.

Best regards,
Suz
1 vote Thank Flag Link Sun May 12, 2013
One thing people often overlook in the rent vs. buy equation is loan amortization. Often people will compare what their PITI minus tax deduction is vs. rent. But with rates this low loan amortization is HUGE. A $500k loan at 3.5% over 5 years, $51,514 of the loan principle is paid down via loan amortization on a 30 year fixed. When you rent, a 5 years you have ZERO paying down of principle. So that $50k needs to go into the rent vs. buy equation.
0 votes Thank Flag Link Mon May 13, 2013
What is cheaper cannot be determined without knowing mortgage rates and the current, local real estate market trends. I always tell people to consider their purchase an investment and try to stay in for the long haul. I don't have to sell clients on ownership very often at all. They tend to know what they want, what they can afford, and truly understand the possible investment opportunity.

Chris
0 votes Thank Flag Link Mon May 13, 2013
City hit a home run with paragraph two.
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In essence, you don't sell onwership!
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In reality the buyer BUYS what they need.
* Stability
* Control
* Life ownership
* Neighborhood & community
* Being a part

Studies in pusuit of 'what makes people happy' have concluded that the happiest people are those with the broadest social (flesh and blood, not cyber) networks. Being part of a community, shariing your life with like minded people, knowing the fears and dreams of others who place trust in you are all part of being part of a community. A commitment to that community often begins with an investment.
-
One may add to that list:
* Happiness

You can't 'SELL' it. YOu only present the opportuntiy for those who have eyes that see and who purchase what they see. If you 'sell', which is the art of minipulation, the outcome is often resentment.

Best of success to you.
Annette Lawrence, Broker/Associate
Remax Realtec Group
Plam Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes Thank Flag Link Mon May 13, 2013
I would say you don't sell it then. I'm a big proponent if it's a lot cheaper to rent, to just rent vs. buy.
0 votes Thank Flag Link Thu Apr 11, 2013
There has to be some kind of value proposition whether property or personally related or we will likely tell potential buyers to wait. The skill is in finding the value proposition and/or being of high enough integrity to tell people to wait if it makes sense.

Best Regards,

Lance R. King
Founder-Managing Broker

King Realty Group
Cell: 415.722.5549
Email: lance@king-realtygroup.com
License# 01384425
0 votes Thank Flag Link Thu Apr 11, 2013
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