Is real estate investing today like catching a “falling knife”?
maria gudelis | July 1, 2008
Well – one may really ask that since we keep seeing real estate in the U.S. declining in value. I’ve seen just in the last two months, one home go down $20,000 in value. One of the key things hurting the values in a given neighbourhood are the short sales that then bring in the comparables down quite a bit.
For instance, if you see a home worth $300,000 and in the neighbourhood 2 short sales happened where the bank accepted an offer of $250,000 for a $300,000 worth home – they did so as they are motivated to get it off their books as no bank wants to keep a non-performing asset. So the downward spiral into Dantes’ inferno of real estate price declines keeps on going because the foreclosures are steadily increasing in this economic environment and the ‘teaser’ rate loans that are adjusting to ‘fixed’ rate, omg I can’t afford this mortgage payment anymore!
So what is real estate investor to do when the equity you think you may have might keep going down?
The key is to know what the demand is for property in that area and that is not as easy to discover as the supply of homes are. If you have a qualified buyers list wouldn’t that make you feel much safer in your real estate investments and take your risk out if you have a buyer before you even contract that property?
If that is of interest to you, check out how to get your real estate buyers’ list going by visiting virtual real estate investing and marketing system
Twitter: mariagudelis
says:
Hi Jonathan and thanks for commenting on my blog! Yes – I think things will rebound as well and yes…in a few years. One interesting thing is the power of FHA loans right now, one of my realtor friends in Las Vegas mentioned to me that he recently is getting a lot of offers within days of listing Real Estate Owned (REO) properties the bank owns. I was pretty shocked as I was hunting for deals from him and he replied only if you are willing to pay 103% of brokers price opinon. I answered that no, I’d only pay 65% of less of BPO as a real estate investor. When I asked him where is he getting buyers at 103% of BPO, he commented that they are retail buyers looking for a home and getting great rates with an FHA loan.
see ya at my next blog post! Maria Gudelis
I feel that things will rebound, it will just take a couple years.