Ted Ihde's Blog: Ted Ihde author of “Thinking About Becoming A Real Estate Developer?”, page 6
December 8, 2024
RIVER QUAY - KANSAS CITY
In Kansas City, if one were to bring up the topic of River Quay (pronounced “River Key”), that conversation would no doubt evolve into a conversation about River Market.
Today, River Market is a hip-and-trendy neighborhood in Kansas City, Missouri. Located just south of the Missouri River. Adorning River Market’s quaint neighborhood feel, you’ll find chic eateries. Coupled to an urban lifestyle. Complete with a streetcar. A stone’s throw to the west of Christopher S. Bond Bridge. That’s today. Today’s River Market. Yesterday’s River Quay.
In 1971, Marion Trozzolo – then, a Rockhurst University professor – began renovating historic buildings alongside the “Big Muddy” in a section of Kansas City that we now know to be River Market. It was Professor Trozzolo who came up with the River Quay nickname.
Trozzolo’s idea for River Quay? For River Quay to undergo a thorough, artsy-remake. Into a Kansas City-styled French Quarter. A neighborhood comparable to Chicago’s Old Town. To San Francisco’s Ghirardelli Square. Trozzolo envisioned a family-friendly environ for River Quay. Unfortunately, the latter half of the ‘70’s was a rough time for this neighborhood next to the muddy Missouri.
The word Quay? It’s a word of French origin. The translation for Quay? Loading platform. Or wharf.
Did River Quay ever become a Kansas City French Quarter? Did River Quay ever become a Kansas City Old Town? Did River Quay ever become a Kansas City Ghirardelli Square? Hardly.
By the late ‘70’s, revitalization efforts in River Quay had stalled. Leaving River Quay saddled with boarded up buildings. Deserted through-streets. A neighborhood, with no vibrancy. Streets, with no traffic. Sidewalks, with no passers-by.
By the late ‘70’s, developers were walking away from unfinished River Quay projects. Whereas River Quay had once – not long before – been primed for a grandiose new identity. One which bespoke of a rebirth for this neighborhood. A transition. From blight. To that of an entertainment district. Yet by the late ‘70’s, River Quay was not on its way to becoming Kansas City’s French Quarter.
By the late ‘70’s, you’d still find an X-rated theatre in River Quay. With mob ties. Homeless, sleeping next to decrepit River Quay buildings. Empty River Quay buildings which had once been fancied as prime renovation opportunities. Projects, sadly cast aside and forgotten. In River Quay.
In the late 1970’s? Well, at that time, River Quay was as an unfinished idea. Full of unrealized potential. Full of unrealized promise. Disappointing, no doubt. Yet today, on those same grounds, alongside the Missouri River, we have Kansas City’s stunning River Market. A great idea. Then a detour. Yet, a happy ending – and a nice story, with a unique history- in Kansas City.
Today, River Market is a hip-and-trendy neighborhood in Kansas City, Missouri. Located just south of the Missouri River. Adorning River Market’s quaint neighborhood feel, you’ll find chic eateries. Coupled to an urban lifestyle. Complete with a streetcar. A stone’s throw to the west of Christopher S. Bond Bridge. That’s today. Today’s River Market. Yesterday’s River Quay.
In 1971, Marion Trozzolo – then, a Rockhurst University professor – began renovating historic buildings alongside the “Big Muddy” in a section of Kansas City that we now know to be River Market. It was Professor Trozzolo who came up with the River Quay nickname.
Trozzolo’s idea for River Quay? For River Quay to undergo a thorough, artsy-remake. Into a Kansas City-styled French Quarter. A neighborhood comparable to Chicago’s Old Town. To San Francisco’s Ghirardelli Square. Trozzolo envisioned a family-friendly environ for River Quay. Unfortunately, the latter half of the ‘70’s was a rough time for this neighborhood next to the muddy Missouri.
The word Quay? It’s a word of French origin. The translation for Quay? Loading platform. Or wharf.
Did River Quay ever become a Kansas City French Quarter? Did River Quay ever become a Kansas City Old Town? Did River Quay ever become a Kansas City Ghirardelli Square? Hardly.
By the late ‘70’s, revitalization efforts in River Quay had stalled. Leaving River Quay saddled with boarded up buildings. Deserted through-streets. A neighborhood, with no vibrancy. Streets, with no traffic. Sidewalks, with no passers-by.
By the late ‘70’s, developers were walking away from unfinished River Quay projects. Whereas River Quay had once – not long before – been primed for a grandiose new identity. One which bespoke of a rebirth for this neighborhood. A transition. From blight. To that of an entertainment district. Yet by the late ‘70’s, River Quay was not on its way to becoming Kansas City’s French Quarter.
By the late ‘70’s, you’d still find an X-rated theatre in River Quay. With mob ties. Homeless, sleeping next to decrepit River Quay buildings. Empty River Quay buildings which had once been fancied as prime renovation opportunities. Projects, sadly cast aside and forgotten. In River Quay.
In the late 1970’s? Well, at that time, River Quay was as an unfinished idea. Full of unrealized potential. Full of unrealized promise. Disappointing, no doubt. Yet today, on those same grounds, alongside the Missouri River, we have Kansas City’s stunning River Market. A great idea. Then a detour. Yet, a happy ending – and a nice story, with a unique history- in Kansas City.
INFLATION
The Producer Price Index measures the average change -over time – in prices domestic producers receive for their output. Whereas “retail” constitutes prices reflected through the sale of goods and services to the public for their own consumption – not for resale – the Producer Price Index measures the cost of goods and services at the wholesale level.
Each month, the Producer Price Index is published by the Bureau of Labor Statistics. Typically, the Producer Price Index is released by the Bureau of Labor Statistics the second week of the month.
Each month, the Producer Price Index is published by the Bureau of Labor Statistics. Typically, the Producer Price Index is released by the Bureau of Labor Statistics the second week of the month.
December 7, 2024
The opposite of overdeveloped, crowded suburban sprawl…Marlboro Township
“The objective of the township’s open space program is to take as much property off-line from development, as cost effectively as possible.” – Marlboro, NJ Mayor Jonathan L. Hornik
Looking at the concerted effort taking place in Marlboro Township – this effort, emanating from City Hall – to remove Township property from contention of being commercially developed, one will find the Marlboro Agricultural and Open Space Committee. This Committee is an advisory committee. The goal of the Marlboro Agricultural and Open Space Committee is to preserve Marlboro’s historically-rural “DNA” by working in conjunction with the Township Planning Board and Town Council. To protect Marlboro’s undisturbed, picturesque open space landscape.
How is this done?
The Marlboro Agricultural and Open Space Committee identifies properties within Marlboro Township that could be eligible to receive Green Acres funding. Once a Township property has been aligned with potential Green Acres funding, the Committee coordinates land preservation efforts, in unison with available Monmouth County programs. Then linking the land preservation efforts in Marlboro Township to Monmouth County officials and to New Jersey State officials.
Once a Marlboro property is determined to be suitable for inclusion in the Township’s open space program, Committee, County and State outreach efforts are aggregated, then deployed.
How come?
Outreach efforts make known the in-the-works, property-specific land acquisition-preservation objective which has been established (and which is being pursued) in Marlboro Township.
Coordinated outreach – undertaken in part to add supplemental funding channels to the capital-intensive land acquisition-preservation effort – provides resources, as well as good points-of-contact, for potential donors to reach out to. Enabling donors to make monetary contributions to the land acquisition-preservation effort which is then underway in Marlboro.
Donations received – these donations, allotted to the advancement of land conservation in Marlboro via Marlboro’s open space program – are able to be deployed by Marlboro Township, in conjunction with funding obtained through Green Acres. Providing capital utilized by Marlboro Township to make possible the acquisition of the land (and then, the preservation of that land as well). Land acquisitions, further advancing the let’s-keep-the-Township-rural, open space preservation goals prioritized by Town Council, and by the Township CEO, Mayor Jonathan L. Hornik.
Collaboration.
Collaboration which is in alignment with the aforementioned Marlboro Township open space program. A fabulous program. Well-thought-out. Alive and well (and quite popular too) in Marlboro Township.
Looking at the concerted effort taking place in Marlboro Township – this effort, emanating from City Hall – to remove Township property from contention of being commercially developed, one will find the Marlboro Agricultural and Open Space Committee. This Committee is an advisory committee. The goal of the Marlboro Agricultural and Open Space Committee is to preserve Marlboro’s historically-rural “DNA” by working in conjunction with the Township Planning Board and Town Council. To protect Marlboro’s undisturbed, picturesque open space landscape.
How is this done?
The Marlboro Agricultural and Open Space Committee identifies properties within Marlboro Township that could be eligible to receive Green Acres funding. Once a Township property has been aligned with potential Green Acres funding, the Committee coordinates land preservation efforts, in unison with available Monmouth County programs. Then linking the land preservation efforts in Marlboro Township to Monmouth County officials and to New Jersey State officials.
Once a Marlboro property is determined to be suitable for inclusion in the Township’s open space program, Committee, County and State outreach efforts are aggregated, then deployed.
How come?
Outreach efforts make known the in-the-works, property-specific land acquisition-preservation objective which has been established (and which is being pursued) in Marlboro Township.
Coordinated outreach – undertaken in part to add supplemental funding channels to the capital-intensive land acquisition-preservation effort – provides resources, as well as good points-of-contact, for potential donors to reach out to. Enabling donors to make monetary contributions to the land acquisition-preservation effort which is then underway in Marlboro.
Donations received – these donations, allotted to the advancement of land conservation in Marlboro via Marlboro’s open space program – are able to be deployed by Marlboro Township, in conjunction with funding obtained through Green Acres. Providing capital utilized by Marlboro Township to make possible the acquisition of the land (and then, the preservation of that land as well). Land acquisitions, further advancing the let’s-keep-the-Township-rural, open space preservation goals prioritized by Town Council, and by the Township CEO, Mayor Jonathan L. Hornik.
Collaboration.
Collaboration which is in alignment with the aforementioned Marlboro Township open space program. A fabulous program. Well-thought-out. Alive and well (and quite popular too) in Marlboro Township.
Producer Price Index
The Producer Price Index measures the average change -over time – in prices domestic producers receive for their output. Whereas “retail” constitutes prices reflected through the sale of goods and services to the public for their own consumption – not for resale – the Producer Price Index measures the cost of goods and services at the wholesale level.
Each month, the Producer Price Index is published by the Bureau of Labor Statistics. Typically, the Producer Price Index is released by the Bureau of Labor Statistics the second week of the month.
Each month, the Producer Price Index is published by the Bureau of Labor Statistics. Typically, the Producer Price Index is released by the Bureau of Labor Statistics the second week of the month.
Chicago
55,000 – Fifty-five thousand would be the number of non-performing residential structures in the city of Chicago five years ago…in 2019.
32,000 – Thirty-two thousand would be the number of vacant lots in the city of Chicago five years ago…in 2019.
In order to increase Chicago’s property tax base, vacant, abandoned and distressed residential structures will need to be renovated, in scale. Thus, transitioning now non-performing “black holes” on Chicago’s balance sheet to investors. And to owner-occupying homebuyers. Intended outcome? The undergoing of substantial numbers of inner city renovation projects of non-performing residential structures. The transformation of what can now be categorized as city liabilities, into city assets.
How about vacant Chicago lots?
Non-performing lots in Chicago need to be conveyed – in scale – to new property owners. Property owners who pursue the building of new homes on the vacant lots.
As new homes are built on what are now vacant city lots, a new revenue source for the city – coming by way of property taxes paid to the city…property tax amounts which are based upon assessment values for properties which have newly-constructed homes on them – is established.
While Chicago is saddled with substantive numbers of non-performing residential structures, the establishment of processes which reduce the number of vacant lots has been a priority for the city.
For example…
Between the years 2015 and 2019, Chicago proceeded to sell in excess of 1,000 (out of approximately 11,500) vacant lots. Five years. Over 1,000 lots sold. On average, over 200 vacant lots sold per year. For five years. Pretty good!
The Chicago Large Lots Program…
Through a program Chicago established to address challenges linked to the high number of vacant city-owned lots – this program being, the Large Lots Program – neighborhood property owners were able to purchase up to two vacant lots from the city. One condition of the lot acquisitions being, the lots purchased needed to be properties on streets on which buyers already owned real estate.
The sale prices of those lots sold through the Large Lots Program? $1 each.
32,000 – Thirty-two thousand would be the number of vacant lots in the city of Chicago five years ago…in 2019.
In order to increase Chicago’s property tax base, vacant, abandoned and distressed residential structures will need to be renovated, in scale. Thus, transitioning now non-performing “black holes” on Chicago’s balance sheet to investors. And to owner-occupying homebuyers. Intended outcome? The undergoing of substantial numbers of inner city renovation projects of non-performing residential structures. The transformation of what can now be categorized as city liabilities, into city assets.
How about vacant Chicago lots?
Non-performing lots in Chicago need to be conveyed – in scale – to new property owners. Property owners who pursue the building of new homes on the vacant lots.
As new homes are built on what are now vacant city lots, a new revenue source for the city – coming by way of property taxes paid to the city…property tax amounts which are based upon assessment values for properties which have newly-constructed homes on them – is established.
While Chicago is saddled with substantive numbers of non-performing residential structures, the establishment of processes which reduce the number of vacant lots has been a priority for the city.
For example…
Between the years 2015 and 2019, Chicago proceeded to sell in excess of 1,000 (out of approximately 11,500) vacant lots. Five years. Over 1,000 lots sold. On average, over 200 vacant lots sold per year. For five years. Pretty good!
The Chicago Large Lots Program…
Through a program Chicago established to address challenges linked to the high number of vacant city-owned lots – this program being, the Large Lots Program – neighborhood property owners were able to purchase up to two vacant lots from the city. One condition of the lot acquisitions being, the lots purchased needed to be properties on streets on which buyers already owned real estate.
The sale prices of those lots sold through the Large Lots Program? $1 each.
Westward Expansion: the Homestead Act, the Preemption Act
During the latter part of the 19th Century, westward-looking American settlers were able to acquire their land, thanks to federal policy – the Homestead Act.
The Homestead Act was signed into law by President Abraham Lincoln on May 20, 1862, and went into effect the following year. In 1863.
Twenty-two years prior to the Homestead Act, we find the Preemption Act of 1841.
The Preemption Act enabled American settlers to claim up to 160 acres of federal land at a cost of $1.25 per acre.
So, inexpensive land acquisition – and westward expansion in early America, for that matter – had already been formal American policy…some twenty years before the Homestead Act became law-of-the-land.
The Homestead Act was signed into law by President Abraham Lincoln on May 20, 1862, and went into effect the following year. In 1863.
Twenty-two years prior to the Homestead Act, we find the Preemption Act of 1841.
The Preemption Act enabled American settlers to claim up to 160 acres of federal land at a cost of $1.25 per acre.
So, inexpensive land acquisition – and westward expansion in early America, for that matter – had already been formal American policy…some twenty years before the Homestead Act became law-of-the-land.
Homesteading
Early on in American history, as settlers pushed westward across the country, land had been able to be conveyed to those early American settlers through the Homestead Act.
Provisions within the Homestead Act called for conveyed land to be transferred with one condition of land transfers being, for that land to be settled, resided upon and cultivated - I:e.: improved - by he who acquired the land.
Early American “developers” - I:e.: westward-pushing settlers - were instrumental in effectuating intent found within the Homestead Act.
Homesteading had been a federal policy in the United States through the mid-1970’s.
In 1976, when President Gerald Ford signed the Federal Land Policy and Management Act, homesteading - as a federal policy - ceased to exist. The Federal Land Policy and Management Act was (and is) applicable to public land in the United States which is managed by the Bureau of Land Management.
Provisions within the Homestead Act called for conveyed land to be transferred with one condition of land transfers being, for that land to be settled, resided upon and cultivated - I:e.: improved - by he who acquired the land.
Early American “developers” - I:e.: westward-pushing settlers - were instrumental in effectuating intent found within the Homestead Act.
Homesteading had been a federal policy in the United States through the mid-1970’s.
In 1976, when President Gerald Ford signed the Federal Land Policy and Management Act, homesteading - as a federal policy - ceased to exist. The Federal Land Policy and Management Act was (and is) applicable to public land in the United States which is managed by the Bureau of Land Management.
Redevelopment Area: New Jersey
In a designated Redevelopment Area, a municipality’s goals could be focused upon transitioning now non-performing residential, commercial and industrial properties to vibrant community assets. The pursuit of which could take on a community-centric theme. Renovations. Repurposing properties. And reconstruction too. Each of these being potential goals pursuant to redeveloping non-performing properties in designated Redevelopment Areas.
Steps taken by a municipality in their progression towards neighborhood revitalization in Redevelopment Areas – progression, coupled to a redevelopment plan emanating from city hall – often starts off with a city council passing a resolution. Following the resolution, the planning board then might construct a Redevelopment map. With a Redevelopment map formulated – and upon notification to the public of a scheduled hearing – a planning board could then potentially adopt a Redevelopment resolution.
A Redevelopment resolution could recommend the establishment of a Redevelopment Area within a municipality. There is quite a bit more technical minutiae to this process, needless to say. Yet, in summarily-simplified terms, this is one we can thus arrive at the designation of a Redevelopment Area within a municipality.
Steps taken by a municipality in their progression towards neighborhood revitalization in Redevelopment Areas – progression, coupled to a redevelopment plan emanating from city hall – often starts off with a city council passing a resolution. Following the resolution, the planning board then might construct a Redevelopment map. With a Redevelopment map formulated – and upon notification to the public of a scheduled hearing – a planning board could then potentially adopt a Redevelopment resolution.
A Redevelopment resolution could recommend the establishment of a Redevelopment Area within a municipality. There is quite a bit more technical minutiae to this process, needless to say. Yet, in summarily-simplified terms, this is one we can thus arrive at the designation of a Redevelopment Area within a municipality.
Oz is representative of an ounce in The Wizard of Oz
The new homes we are building in Kansas are being financed by an East Coast banker. Midwest…East Coast. So I hear my share of, “How is Dorothy?"
The movie (or, the book, really) East Coasters are referring to is The Wonderful Wizard of Oz. Publication date, May 17, 1900. A book written by L. Frank Baum.
Ironically, Baum’s book is as much about East Coast finance, as it is about a girl from Kansas.
The Wizard of Oz. Oz is the abbreviation for ounce. An ounce of gold. An ounce of silver.
The yellow brick road in The Wonderful Wizard of Oz represents gold. Dorothy's silver slippers represent silver. Gold and silver are measured in ounces. Hence…Oz. The Wizard of Oz.
in the movie, Dorothy’s slippers are red. But in the book - I.e. how Baum wrote the story - Dorothy’s slippers are silver. The book - much moreso than the movie - represents Baum’s ideas.
An ounce - I.e.: Oz - of silver. An ounce - I.e.: Oz - of gold.
The movie (or, the book, really) East Coasters are referring to is The Wonderful Wizard of Oz. Publication date, May 17, 1900. A book written by L. Frank Baum.
Ironically, Baum’s book is as much about East Coast finance, as it is about a girl from Kansas.
The Wizard of Oz. Oz is the abbreviation for ounce. An ounce of gold. An ounce of silver.
The yellow brick road in The Wonderful Wizard of Oz represents gold. Dorothy's silver slippers represent silver. Gold and silver are measured in ounces. Hence…Oz. The Wizard of Oz.
in the movie, Dorothy’s slippers are red. But in the book - I.e. how Baum wrote the story - Dorothy’s slippers are silver. The book - much moreso than the movie - represents Baum’s ideas.
An ounce - I.e.: Oz - of silver. An ounce - I.e.: Oz - of gold.
A real estate feature that is great for buyers. A real estate feature that is great for sellers. The 2-1 interest rate buydown
When mortgage rates are high – like they are today – you can use a 2-1 interest rate buydown to obtain a lower mortgage rate. And a lower mortgage payment.
The 2-1 interest rate buydown is a home loan feature whereby funds are set aside in an escrow account at the closing. These funds are set aside for the benefit of the buyer. The escrowed funds enable the buyer to “buy down” their interest rate for the first two years. In year one, the buyer’s interest rate will be 2% lower than the 30-year rate. In year two, the buyer’s interest rate will be 1% lower than the 30-year rate.
The 2-1 interest rate buydown is simple. It’s a 2% interest rate reduction in year one. It’s a 1% interest rate reduction in year two.
In years 3 through 30, the buyer’s interest rate remains the same. The buyer’s mortgage payment will remain the same as well. The buyer’s interest rate in years 3 through 30 – as well as the buyer’s mortgage payment in years 3 through 30 – is established when the buyer locks their rate.
The 2-1 interest rate buydown provides a buyer with an opportunity to qualify for a larger loan amount. This increases the number of homes the buyer can go out and look at.
By using the 2-1 interest rate buydown, a buyer can purchase a larger home. A buyer can purchase a more expensive home. A buyer can purchase a home with more “bells and whistles.” All are nice options. Possible, through the use of the 2-1 interest rate buydown.
What does a 2-1 interest rate buydown cost?
The cost of the 2-1 interest rate buydown is equal to the difference between principal and interest payments – based on the 30-year rate, which goes into effect in year 3 – and the principal and interest payments on the bought-down, lower rate in year 1 and year 2. Escrowed buydown funds are paid at the closing. Paid by the seller. Held in escrow. For the benefit of the buyer.
You are thinking about selling your home. How can the 2-1 interest rate buydown help you, as the seller? Let’s look at a few situations…
When the housing market is softening. When higher numbers of sellers are listing their homes for sale. When the housing market shifts from a seller’s market to a buyer’s market. When you see price reductions. When homes are sitting on the market – unsold – for longer periods of time. In each situation, the 2-1 interest rate buydown is an attractive tool that can be used by a seller to attract more buyers.
Over the past few years, mortgage rates have remained stubbornly high. When mortgage rates are high – like they are today – buyers who may be thinking about purchasing a home are also thinking about those higher mortgage rates. Higher mortgage rates = higher mortgage payments.
The 2-1 interest rate buydown lets a buyer get into the home they want today, with an interest rate during the first two years that will be closer to the lower mortgage rates buyers were used to seeing a few years ago. Lower mortgage rates buyers are eagerly waiting for. Mortgage rates…that are just not getting much lower.
Families hoping to purchase a home are taking notice of higher mortgage rates. Higher mortgage rates place pressure upon family budgets. This affects whether a buyer will decide to submit an offer to purchase a home. Which in turn, affects prices sellers get for homes they are selling. All being good reasons to consider using the 2-1 interest rate buydown. The 2-1 interest rate buydown benefits buyers. The 2-1 interest rate buydown benefits sellers.
Through the 2-1 interest rate buydown, as the seller, you offer your buyers the benefit of the lower mortgage rate. And the lower mortgage payment too. In year one. And in year two.
As the seller, by offering your buyers a lower mortgage rate for the first two years, you will attract more buyers to your home. Because your home is being sold with the 2-1 interest rate buydown. Because your home is being sold with a lower mortgage rate. Because your home is being sold with a lower mortgage payment. For two years. As the seller, this positions your home – which is being presented to buyers, with the 2-1 interest rate buydown – as an attractive option. Especially when compared to other homes on the market that buyers may be looking at. Because those homes don’t provide buyers with a lower mortgage rate in year 1 and year 2. Because those homes don’t provide buyers with a lower mortgage payment in year 1 and year 2. And yours does!
The 2-1 interest rate buydown. It’s great for sellers. The 2-1 interest rate buydown. It’s great for buyers.
The 2-1 interest rate buydown is a home loan feature whereby funds are set aside in an escrow account at the closing. These funds are set aside for the benefit of the buyer. The escrowed funds enable the buyer to “buy down” their interest rate for the first two years. In year one, the buyer’s interest rate will be 2% lower than the 30-year rate. In year two, the buyer’s interest rate will be 1% lower than the 30-year rate.
The 2-1 interest rate buydown is simple. It’s a 2% interest rate reduction in year one. It’s a 1% interest rate reduction in year two.
In years 3 through 30, the buyer’s interest rate remains the same. The buyer’s mortgage payment will remain the same as well. The buyer’s interest rate in years 3 through 30 – as well as the buyer’s mortgage payment in years 3 through 30 – is established when the buyer locks their rate.
The 2-1 interest rate buydown provides a buyer with an opportunity to qualify for a larger loan amount. This increases the number of homes the buyer can go out and look at.
By using the 2-1 interest rate buydown, a buyer can purchase a larger home. A buyer can purchase a more expensive home. A buyer can purchase a home with more “bells and whistles.” All are nice options. Possible, through the use of the 2-1 interest rate buydown.
What does a 2-1 interest rate buydown cost?
The cost of the 2-1 interest rate buydown is equal to the difference between principal and interest payments – based on the 30-year rate, which goes into effect in year 3 – and the principal and interest payments on the bought-down, lower rate in year 1 and year 2. Escrowed buydown funds are paid at the closing. Paid by the seller. Held in escrow. For the benefit of the buyer.
You are thinking about selling your home. How can the 2-1 interest rate buydown help you, as the seller? Let’s look at a few situations…
When the housing market is softening. When higher numbers of sellers are listing their homes for sale. When the housing market shifts from a seller’s market to a buyer’s market. When you see price reductions. When homes are sitting on the market – unsold – for longer periods of time. In each situation, the 2-1 interest rate buydown is an attractive tool that can be used by a seller to attract more buyers.
Over the past few years, mortgage rates have remained stubbornly high. When mortgage rates are high – like they are today – buyers who may be thinking about purchasing a home are also thinking about those higher mortgage rates. Higher mortgage rates = higher mortgage payments.
The 2-1 interest rate buydown lets a buyer get into the home they want today, with an interest rate during the first two years that will be closer to the lower mortgage rates buyers were used to seeing a few years ago. Lower mortgage rates buyers are eagerly waiting for. Mortgage rates…that are just not getting much lower.
Families hoping to purchase a home are taking notice of higher mortgage rates. Higher mortgage rates place pressure upon family budgets. This affects whether a buyer will decide to submit an offer to purchase a home. Which in turn, affects prices sellers get for homes they are selling. All being good reasons to consider using the 2-1 interest rate buydown. The 2-1 interest rate buydown benefits buyers. The 2-1 interest rate buydown benefits sellers.
Through the 2-1 interest rate buydown, as the seller, you offer your buyers the benefit of the lower mortgage rate. And the lower mortgage payment too. In year one. And in year two.
As the seller, by offering your buyers a lower mortgage rate for the first two years, you will attract more buyers to your home. Because your home is being sold with the 2-1 interest rate buydown. Because your home is being sold with a lower mortgage rate. Because your home is being sold with a lower mortgage payment. For two years. As the seller, this positions your home – which is being presented to buyers, with the 2-1 interest rate buydown – as an attractive option. Especially when compared to other homes on the market that buyers may be looking at. Because those homes don’t provide buyers with a lower mortgage rate in year 1 and year 2. Because those homes don’t provide buyers with a lower mortgage payment in year 1 and year 2. And yours does!
The 2-1 interest rate buydown. It’s great for sellers. The 2-1 interest rate buydown. It’s great for buyers.
Ted Ihde author of “Thinking About Becoming A Real Estate Developer?”
Today, a real estate developer and a licensed real estate broker, Ted graduated Summa Cum Laude from Bloomfield College.
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