Dec 29, 2009
Strategies For Buying Real Estate In A Slow Market
The real estate market tends to be cyclical with some periods favoring buyers and other periods favoring sellers. As with other free markets, the pricing and availability of real estate is directly related to the forces of supply and demand. While many real estate markets in the United States are experiencing a substantial slowdown, other markets remain robust, and some even continue to grow. What makes the situation even more complicated is that even within a particular city or county, there may be some areas that are hot and others that are cold.
In regions of the country in which the real estate market is slowing, there are some things homebuyers can do to increase their chance of getting the property that they want on terms that are favorable. Below are some strategies to consider:
1. Clarify What You Want. Be sure to understand what kind of property you want (e.g. bedrooms, bathrooms, size, yard, location, etc.). Identify items that you “must have” and items that you would be willing to forego if your other priorities were met.
2. Consult Experts. You’ve no doubt heard the saying that “all real estate is local,” so arm yourself with the best information available. Consult a local real estate expert who can guide you about what communities are hot and which ones are not. Obviously, you are more likely to find deals in communities that have excess supply and limited demand than vice versa.
3. Understand Market Data. Obtaining and evaluating data can be one of the most powerful tools in your arsenal. Identify communities that you find desirable and ask your real estate agent to provide you relevant sales statistics. For example, your agent can provide you:
a. A summary of how many properties are available in communities that you deem desirable.
b. How long properties are taking to sell this month, last month, last quarter, last year, etc.
c. How many properties have sold this month, last month, last quarter, last year, etc.
d. Changes in the median and average price of properties for a community this month, last month, last quarter, last year, etc.
e. Data on the sales price to list price ratio (SP: LP). This ratio provides information about how much, on average, sellers are reducing their price.
f. Detailed data on properties that are similar to the type of property you desire (often known as “comparables” or “comps”).
4. High Inventory Communities. Identify, or ask your agent to identify, communities that appear to be particularly slow, and that have an unusually large inventory of homes. You will have a broader variety of options in these communities, and you may increase the likelihood of finding a better deal.
5. Loan Pre-Approval. Be sure to consult with your bank or mortgage broker and obtain a loan pre-approval document. This not only let’s you know how much you can afford, but it also demonstrates to sellers that you are a serious buyer and that your offer is worthy of serious consideration.
6. Seller’s Motivation. While information about why a seller is selling is usually confidential, there are situations in which the seller will allow their agent to disclose important factors regarding their personal situation. Be sure to ask your agent to inquire about any information that the seller has disclosed to his/her agent that can be conveyed to your agent. This information may help you decide on making an offer on a property and the price you wish to offer.
7. Home Inspection. A home inspection conducted by a qualified inspector can provide you valuable information about the condition of a property. Moreover, if there are items that need repair or replacement, you can use this information to modify your offer price or terms.
8. Expand Search Scope. As mentioned above, even within a particular city or county, there may be some areas that are hot and others that are not. Be sure to provided detailed information about what you want to your agent, so that he/she can provide you a variety of community options.
9. Be Patient. Time is on your side when there is excess supply and insufficient demand. Try not to “fall in love” with a house so much that you cannot be objective. It may be that multiple offers and counter-offers occur before you either get the property you want or decide to walk way from a deal. You may also want to look at more properties than you normally would, so that you are exposed to a variety of options.
While the above is not an exhaustive list of strategies, it is a good starting point of issues to consider when buying real estate, particularly in a market that favors buyers. Obtain the services of a knowledgeable Real Estate agent who can provide you with additional strategies to help you reach your real estate objectives.
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Help answer the question about buying real estate
Question about buying real estate in New York?
I am interesting in buying and apartment in New York for the purpose of renting. I have down a little research and found several real estate brokers around the city. What is the best area in Manhattan to buy and rent? Also, what should I ask when i meet with the broker? I am interested in a Condo, not coop and I have a fixed budget to work with.
Much appreciated,
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San Diego Real Estate
Riverside Real Estate
Pacific Beach Real Estate
Well first and foremost you need to come up with the money. Here are some ways. . . . This is the biggest challenge and where most people give up on the whole idea. . . .
1. Get a mortgage http://www.jeremydrobeck.com
2. Ask friends & family to lend you the money
3. save up the $$$
4. withdraw from a 401k
5. move the money to a self directed IRA and then use the the IRA to buy property
6. personal loan
7. Get a peer to peer loan online.
Hi
I am a real estate agent in Los Angeles Ca.
If you can help me where to find those banks notes .
Where do I need to start?
I thank you/
I am an agent, I closed on a property yesterday for 434K and the house appraised 2 years ago for 800K…it really depends on the bank, some banks don’t even accept FHA lons, It also depends on the condition of the house..in most cases form my experience, your offer will not be accepted without signing a bank adddendum, you have to read that document carefuly and consult an attorney..
Hi Paul I was wondering can you get me a loan specialist on the FHA 203k rehab loan and the repo loan for ohio and detroit? and get me a list of properties the qualify in both cities
YES ,
I make about 60K a yr in rent on an avrage of 6 homes
Its not all proffet. I try to make at least 200.00 a month more than the MTG , INS, & Taxes The longer U own it the the smaler the MTG Payment ,The ins & tax goes up And tennants Move out etc. Long Turm is ok Property Values aventuly go UP and then U can Cash in eather sell it Keep it for income / retierment
Good Luck
I don't know what you mean by savings. The mortgage interest and property taxes are deducted on schedule A as you already know. That helps to reduce the amount of tax you owe at the end of the year. (if you would have owed any). I guess what you are asking is how much each paycheck will you save in federal income tax??
To figure that out you have to know how much interest per year your mortgage will be and how much property tax your house will be charged.
After you know those answers you can divide the total by the number of paychecks you receive a year and then have your employer reduce your federal witholding by that amount.
The first goal is to live within a budget. You'll need to do this to properly handle the house payment and still put some aside for retirement.
The next goal is to aggressively save for a down payment.
While you're saving for the down payment, read and research the home buying process.
You dont need to join a website to get listings. However, what we have done at the office is purchase a marketing kit from http://www.getthoselistings.com it worked well because we were able to target specifically the listings we wanted…and my boss was thrilled because our completive advantage increased drastically! But check it out, and if you have any questions I'd be glad to help (or I'm sure you can contact the site owner).
No.
But anyone who tells you at your level of experience and knowledge to go in debt to invest and buy real estate by using your home as security is doing you a disservice, especially as roller coaster natured as California real estate is. There will even be someone who will counter my comments herein to say how wrong I am and tout their success. I recall the Bible verse that says "Many are called but few are choosen." So as you are filing the bankruptcy forms it is too late, and you'll remember to not do it again. I have helped people like you write the letters of explaination for their financial failures enough to know that for the average person it is not a wise decision to gamble with the family home and its security.
You need to save some funds, for in the next yr or so there will be forclosures in CA that you will be able to get favorable bank financing on at good prices. I'd suggest that a better investment is a commercial income producing property that has long term leases and low turnover with "credit" tenants if possible.
A lot of these guru people that tell you to go in debt also have disclaimers in small fonts that also say "…these results are not typical." There will be a few that do succeed and those few will be the featured guests- who are also compensated for their endorsement. Several of those same guru pitching their material have also been bankrupt but they do not tell you that, because you would then not buy their program because it did not work for them not does not work for most people. That is why they now "tell" you how to get rich, as they get paid- by you up front for their "knowledge" or technique. Many simply tell you what you want to hear, an easy way to get wealthy when in fact there is no such way or everybody would be doing it.
True, real estate is a good means to grow wealth but there are better ways to invest in real estate with less risk than leveraging your home thereby putting it, possibly your marriage and family at risk.
My dealings with relo companies have been mixed. It used to be more common for companies to offer relocation packages to employees of a *certain position*. The benefits to the employees can vary widely.
Sounds like you are dealing with a buy-out. That's a pretty sweet deal for the transferring employee. Typically, an appraisal is done and the employee and the company reach an agreement of a buy-out price. At that point, there is little incentive for the transferring employee to negotiate the price down from what the company has agreed to pay.
At this point, you will typically do all negotiations with the owner, not the relo company. Some times, after the property is under contract between the owner and a buyer, but, just before closing (a couple of days), the relo company will buy out the owner and then closing documents and will show the relocation company as the seller of record. Just depends on the deal the owner (transferring employee) has.
You may just have to wait and see if you can negotiate with the relo company AFTER the buy-out. It may take a while until the relo company recognizes that the asking price is too high. Then you may be able to negotiate a lower price.
Good luck.
where the turf..meets the surf….. your fingers not pulsating that much,
if you have time to write the 1st chapter of a very boring book.
Better question is what area in Manhattan can you afford. Before meeting with the broker you should let him/her know what your price range is. Questions to the realtor should be:
How much down payment
Monthly maintenance
How difficult to be accepted by Condo Association
Amount of money in reserve for major repairs and renovations of common areas.
How often have owners been charged with special assessments.
Do some research of average condo prices per sq. footage,
Good luck