Buying Mortgage information Selling

The Difference between Cost vs. Price

Sellers and buyers of real estate often fixate on what the price of a property is and in doing so, lose sight of the more important factor, cost.  Price is what you get for the property if you are a seller and what you pay for it if you are a buyer.  However, what affects both seller and buyer on a monthly basis is the cost.  In addition to principal, interest, taxes and insurance costs, there are maintenance costs and maybe association fees.

If you are a seller, consider how much it is costing you to carry that property each month you don’t sell it.  Based on the inventory of similar properties in your area vs the number of sales, you can calculate how much it is going to cost you to continue carrying that property for the average number of months it is taking to sell properties in your area.  I suggest you cut your sales price and take the loss upfront vs slowly  cash out each month.

If you are a buyer, realize that there has never been a better time to buy than right now.  You have a large number of options, the interest rates are the lowest they have been in decades and there is the government tax credit that expires at the end of April 2010.  If you are waiting for prices to go down lower, consider the cost of owning if the prices go down but the interest rates go up.  If prices come down 10% more, but interest rates inch up only 1% your monthly payments are going to be roughly the same.