Falling Home Value – Strategies

On May 24, 2011, in Sellers, by David Monsour

Mid year 2006 marked the price peak of real estate.  Since that time buyers have been gobbling up well priced real estate and capitalizing on fantastic interest rates.  Sellers basically feel like they’ve been sucker punched.  Some purchased high and are plain old stuck and some watched their equity melt away like an ice cube in the hot sun.  Appreciated markets tend to provide a lot more options than markets in decline.  When values are going up banks are aggressive, and buyers have a lot of creative options that allow equity build up without counting on the small portion of payments to be the only thing working in their favor.

I titled this strategies but realistically there isn’t anything that can be done stop the value from falling, but there are ways to capitalize.  Simple put there aren’t enough buyers in the market to create a sellers market and there won’t be enough to do so for a long time.  Foreclosures and short sales destroy credit which decreases the amount of home buyers in the market.  On the bright side of the equation new home construction has slowed and the population is still increasing so the demand for housing won’t be bad forever.

1.)  If you haven’t refinanced into a rate under 5% what are you waiting for?  We know inflation is coming and with inflation comes increased interest rates on all goods and services.  Real Estate is no different.  If you’re into an adjustable rate mortgage do whatever you can to get out.

2.)  Keep your home in top notch condition.  Buyer’s can be picky.  There isn’t enough competition in the market for sellers to avoid consideration of all offers.  Even bad offers have to be considered.

3.)  Take advantage of the rates.  Properties like rental properties are typically valued based on income.   Expand your net worth using your existing equity and purchase rental properties.  Low rates mean larger profit margins.  Just remember that when investing in real estate money is made on the front end not the back end.

4.)  If you decide to sell price the house at the right price.  The house will always be worth more to the person selling it than the person buying it, but if the house is “worth it” the odds of obtaining full price or close to full price is much higher.  People find that when they overprice the house in the beginning they end up selling for less than the original suggested price.  People who price right from the beginning almost always end up netting more than the greedy seller.

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