Are you currently providing clients with an ownership expense analysis?
- No, but I will start. (67%, 8 Votes)
- Yes of course! (33%, 4 Votes)
Total Voters: 12
Sales volume is low, interest rates are down, and renters are now wondering: “Should I buy?”
first tuesday insight
The best way to answer this question for your potential clients is with an ownership expense analysis (OEA). An OEA lays out the costs of ownership against the costs of renting. The analysis looks like this:
[mortgage + utilities + insurance + property taxes + maintenance] vs. [deposit + rent]
If running calculations in front of a client makes you uneasy, don’t worry. The New York Times website has a handy Buy vs. Rent calculator, a digital OEA. This allows the potential buyer to input his current rent, home sales price, down payment, interest rate and property taxes and calculates the number of years it takes to overcome the costs of entry into the market.
After toying with the calculator, it is easy to see that buying only makes financial sense after a certain number of years. This is important. If buyers are not sure they can stay put for a certain length of time, buying might not make sense for their particular financial situation.
This calculator is a quick and simple tool an agent can use to help clients make sense of what is the largest purchase in their lives.
RE: “Rent or Buy? With Rents on the Rise, New Yorkers Do the Math” from the New York Times
You may also consider using this helpful credit card debt payoff calculator to help reduce your debt before qualifying for a mortgage.