Activity is picking up. More and more people are looking to sell their owner carryback notes. More and more people are creating owner carryback notes.
Industry experts who track these things estimate that about 1 out of every 50 real estate transactions involves some kind of owner carryback. I can remember giving a presentation to a real estate group several years ago where I said that 1 out of every 400 real estate transactions involved an owner carryback.
How far reaching is this activity? A July marketwatch.com article referred to a 35,000 square foot mansion in San Francisco that has been on and off the market for the past 10 years. Asking price? $29 million. The seller decided to sweeten the pot by putting the home back on the market with this proviso – if the buyer agreed to allow the seller to carry back 40% of the purchase price, the seller would offer a 3.8%, 30 year fixed interest rate and reduce the price to $26 million.
Any takers out there?
The high end market sees a lot of cash transactions, but creativity and the desire to sell doesn’t seem to have market value boundaries. If you are selling a property and don’t have any takers, maybe you should sweeten the pot and hopefully attract the right buyer. Offer an owner carryback with strong but fair terms for both parties. Meet the fall rush and become a part of it.