REThink Real Estate
By Tara-Nicholle Nelson
Inman News®
Share This
Q: I am on a mission to buy a home. I’ve wanted to own a home my entire life, and thought I would miss the opportunity to buy while the market was down, because I had no real savings when the market crashed. I think I’m ready, though, and prices still seem low. What should I be doing now to make this happen in 2012?
A: Let me count the ways — I mean, the things — you can and should be doing now if you want to buy this year. The recession has done lots of favors for buyers-to-be, including dropping prices and interest rates to bargain levels. But it has also created a lending and housing market climate in which loans are tough to get, tensions about buying into a down market run high, and transactions are harder and longer to close than they have ever been.
If I were talking to a friend who wanted to throw a New Year’s 2013 party in her new home, here are the things I’d tell her to do, stat:
1. Fix credit problems. More deals than ever are dying on the vine, and credit problems are a top reason home-sale transactions fall out of escrow. Detect and correct errors on your credit report now by reviewing the federally mandated free reports you can get at AnnualCreditReport.com.
2. Study up. Do some research, both online and offline, into things like:
Areas: Start your online research into decision points like tax rates, school districts, neighborhood character and even prices in various areas. Check out NabeWise.com for some local insight into neighborhood flavor and personality.
When you start connecting with local agents, ask them to brief you on neighborhood market dynamics. They can give you a deeper view into need-to-knows like how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search vis-à-vis what you have to spend.
Agents: This is the perfect time to ask your family and friends for a referral to an agent they know, have used and love. Then, follow up by doing an online search for the agent’s name and seeing what sort of online reviews and activities you find. When you’ve narrowed the field down to a few, call them up and set up a meeting to find out if you’re a good fit.
Distressed properties: In some areas, more than 40 percent of the homes on the market are short sales and foreclosures, and they involve a very different timeline and set of facts than traditional home sales. Read up and talk with the agent candidates you interview about what you should expect from these types of listings, to minimize surprise and manage your expectations way in advance.
3. Save even more. Sounds like you’ve worked hard for a number of years to save enough cash that you think you’re in the clear when it comes to funding your down payment and closing costs. Studies show that after months of saving, people often let up and relax into a spending season. Even at your early stage in the process, it’s easy to start noticing and buying the furnishings and touches you want to install in your new home.
While I don’t want you to feel deprived or forgo amazing and affordable deals on things you know you’re going to need, I assure you that no matter what amount of cash you have on hand, when you start house hunting, making offers, closing your transaction or moving in, the time will definitely come when you’ll wish you had more.
You might want to ratchet up your offer a bit to best another buyer, or you might just end up with a place that needs a little sprucing up. It might be months before you know exactly what you’ll need extra cash for, but now is not the time to press the gas pedal when it comes to your monthly spending.
4. Purge. Now’s the time to sell, donate or give away as much of your junk or, excuse me, precious personal possessions as you can. Use the proceeds to pad your cash cushion, or tuck the donation receipts away for your tax records next year.
Start here, and chances are good that your house hunt — and purchase — will be in full swing by spring, if not sooner.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions
Ready to get started – give us a call 980-521-7816

Bookmark It

Hide Sites

RISMEDIA, August 5, 2011—Jason Hartman, creator of the Complete Solution for Real Estate Investors™, discusses current trends in real estate and economist forecast in his “The Investment Real Estate Forecast” report. With the first half of 2011 in the rear view, Hartman’s forecast explains in detail that current government policy is tilted in exactly the opposite direction of factors needed—as monetary expansion and skyrocketing debt continue to finance spending initiatives having little to no impact on the fundamental tenants of innovation and productivity driving long-term economic growth.

For the remainder of 2011 and beyond, the prospect of future inflation and higher interest rates does not bode well for most forms of business or investment. However, there is a bright sliver of opportunity for investment vehicles capitalizing on fixed-rate debt to leverage income producing tangible assets that will have their nominal value increased and their debt debased by inflation.

“The most obvious remedy for this problem is income producing real estate,” says Hartman. “Since most income producing properties are financed with fixed-rate mortgages, they will provide an excellent hedge against inflation for investors.”

“Rental income will be directly impacted by the expected increases in interest rates as more people are pushed out of the homeownership pool into the renter pool,” adds Hartman. “This will have the net effect of strengthening market rents.”

Heading into 2011, one of the most impactful news items was the announcement by Bank of America suspending foreclosure activity and the decision by government agencies to increase scrutiny on the foreclosure process. Halfway through 2011, nobody completely knows how long this increased scrutiny will last, how intense it will be or the long-term impact on market activity.

Hartman predicts prices will be temporarily strengthened as the inventory of foreclosures is artificially constrained. Currently, people are being held out of the rental pool while living in their house (without paying a mortgage) as the foreclosure process proceeds at a snail’s pace. The impetus behind this is quite clear since the politicians in charge of government policy are attempting to curry favor with their constituents by helping them stay in houses they cannot afford.

Over time, this decision will continue playing out and the market will regress back to equilibrium. In many markets, this will take the form of short-term price stabilization or increase, followed by softening of market prices as foreclosure inventory that had been held off the market comes back on. In conjunction with this, people will be moving out of the “owner” population and into the renter pool. Rents will only strengthen as the population of renters increases faster than the supply of rental properties. This will remain true even if investors purchase some of the foreclosed properties because the displaced owners become renters.

In some markets with low land values, the wave of foreclosures is pushing market prices far below the cost of construction. Fundamentally, this means that buyers will have “built-in” equity since the low prices have ground new construction to a halt and future demand increases will push market prices up toward replacement cost before new construction begins.

Jason Hartman

Bookmark It

Hide Sites

We have added a new news section to our page, this will allow you to view new news relating to real estate.

Bookmark It

Hide Sites