Do you know a Millennial when you meet one? If you are selling a home and willing to carry the note, let me introduce you to a good prospect as a potential buyer of your home:
Age – 33 and younger
Income – $73,000+
Home he will buy – 1800 square feet
Price – $180,000
This “picture” of a Millennial was described in a March 11, 2014 report released by the National Association of Realtors. NAR reports that 78% of first time home buyers are Millennials, the largest group since the baby boomers. The pie chart for home buyers looks like this:
31% – Millennials, age 33 and younger
30% – Generation X, age 34-48
16% – Younger Boomers, age 49-58
14% – Older Boomers , age 59-67
9% – Silent Folks, age 68-88
Lawrence Yun, NAR’s Chief Economist, said “given that Millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand. However, the challenges of tight credit, limited inventory, eroding affordability and high debt loans have limited the capacity of young people to own.”
What does this mean for you as a seller of a property? Opportunity!
So, if you meet a potential buyer that fits this description, the odds are you have a solid prospect for a seller carry back transaction. Using NAR’s averages, let’s assume you are asking $180,000 for your well kept 1800 square foot home. Here are some possible negotiating terms:
Sales Price – $180,000
Down payment Note Amount Interest rate Monthly Payment, 30 yr Am.
5%, $9000 $171,000 10% $1500.65
10%, $18,000 $162,000 9% $1303.49
15%, $27,000 $153,000 8% $1122.66
20%, $36,000 $144,000 7% $958.04
Remember, no matter who your buyer is, you take a risk by offering a seller carry back. The biggest risk? He doesn’t pay you. Can you handle the downside of this transaction as well as a multi billion dollar bank can? Probably not. You must be compensated for this risk. And, that compensation normally comes in your demand of a significant down payment, higher interest rate, and/or shorter pay period.
Be on the lookout for this buyer!