Tips for Property Buyers Who Come Up Short
ADD SUGAR. That's the figurative advice real-estate brokers and investment advisers are dispensing to their clients, both buyers and sellers. With interest rates rising, some lenders tightening their standards for borrowers and prices for good-quality assets expected to remain high, experts say real-estate investors will need to sweeten the pot to close the gap between what sellers ask for and what buyers can afford.</br></br>Some techniques being recommended are designed to keep the buyer's down payment low. Others allow buyers and sellers to work out a way for buyers to afford a property as higher rates make conventional loans more costly. While these methods aren't new, they are being recommended more forcefully these days.</br></br>"We're going into a period where money won't be as easy to get. . . . Interest rates and mortgage rates ticking up is going to make financing a little tighter," says Jim Lumley, a Realtor in Amherst, Mass. "That means sometimes the sellers will have to be more flexible than they have in the past. Some of these techniques really speak to those sellers' flexibility."</br></br>Here are some of the techniques and how they work. They aren't guaranteed and sometimes can be risky for the buyer as well as the seller. In fact, sellers could end up back at the drawing board if these techniques collapse -- with properties on their hands to sell.</br></br>-- Rent Assignment. The buyer promises the seller the first month's or a few months' rent from the property instead of pocketing it himself. That money can then be put toward a down payment. Timour Shafran, managing director of Capin & Associates Inc., a New York- based real-estate brokerage firm, says buyers attempting this method better be sure to have enough money after assigning the rent to cover expenses, including debt service, if there is a mortgage on the property.