The era of historically low 3% mortgage rates has long faded into the past…

Prospective buyers are now more hesitant to make purchases at original costs with the elevated 7-8% interest rates unless there are substantial discounts involved. Over the past year, Puerto Rico’s luxury resale market has experienced a decline of approximately 40% in volume sales (according to MLS Data). This drastic downturn has resulted in property prices seeing reductions ranging from 20-35% since 2022. It is important to note, however, that not all assets have been affected equally.

A robust demand still persists for the high-end, turnkey luxury real estate market. While buyers anticipate the market to reach its bottom, there remains a noticeable gap in the marketplace. One effective strategy to bridge this divide until the market adapts is Seller Financing.

Nearly half of The Colectivo Group’s 2023 sales have employed this tool, establishing our firm as a market leader in creatively connecting sellers and buyers in the current economic climate. In our vast experience, The Colectivo Group has used Seller Financing to successfully facilitate numerous transactions in Puerto Rico’s luxury market, involving homes ranging from close to $2,000,000 to well over $10,000,000.

Once both Seller and Buyer agree on a price, assembling the remaining pieces of the puzzle becomes more manageable. The secret sauce depends on factors such as the Buyer’s profile, the Seller’s risk tolerance, tax considerations, and timing. For instance, Seller Financing can be highly beneficial for individuals relocating to Puerto Rico without sufficient banking history on the island, making the traditional financing route challenging. This Is not a one-size-fits-all approach; each case requires an individualized assessment.

Is Seller Financing just a passing trend?

In the high-end million dollar market, financial flexibility plays a significant role. Until interest rates decrease, utilizing Seller Financing can quickly expedite the deal-making process.

However, it’s essential to acknowledge the risks associated with non-traditional lending tools. It’s advisable to consult with an experienced real estate attorney to comprehensively understand the pros and cons of this financing approach.

If you would like to assess whether Seller Financing could be a viable option for your real estate goals in Puerto Rico, get in touch with one of our knowledgeable expert agents for an initial analysis.