Great Opportunities in a Down Market

I am so glad the election is finally over. The media-- relentless in its search for terrible news-- had plenty of topics to pick from leading up to the first Tuesday in November. Now that the dust has settled, I would like to clear up a couple of important points regarding the buying and selling and financing of real estate.
First… Loans for houses are readily available without huge down payments Reading the paper or watching the news over the past few months, you might just think it’s impossible to obtain financing for anything. It has definitely become more difficult to qualify for a mortgage… that’s true; but with some consultation and a well planned strategy, we can help prepare you to qualify in short order.
Secondly... Now is a good time to buy and sell. Obviously, the decreasing values and increasing inventory of homes on the market make this an excellent time to buy; so wouldn’t that mean it’s also the worst time to sell? Maybe not. Last week, I attended the National Association of Realtors Convention to educate myself about the challenges in the current real estate environment. The knowledge I gained in that one weekend now allows me to offer more concrete solutions and advice to both my clients and my Realtor partners. And I also learned some interesting facts. For instance, anyone considering the purchase of a new home potentially has one of three hang-ups— either real or perceived—about buying now:
(1) They believe that home prices might decline further; (2) They have an existing home to sell; or (3) They believe it’s impossible to qualify for a mortgage. While it’s true that prices have dropped considerably in some areas around Metro Atlanta (in high foreclosure areas) others— in great school districts, for example— have held up well, so trying to time the bottom of the real estate market is no different than trying to time the stock market…it’s impossible. Stop trying! If you are a first time homebuyer or someone in transition with nothing to sell, go find a good deal and pat yourself on the back. It’s a great time to buy.
The bonus may be the first time homebuyer tax credit (learn more at www.federalhousingtaxcredit.com). There is a big push right now by various industry trade groups to make this a non–refundable tax credit, which would make purchasing now that much more compelling. If you have a house to sell, there are more considerations. First, let’s look at the reasons where it might make sense to wait before you sell. If your home is located in an area of high foreclosure activity it may be worth waiting if you believe that it is a temporary phenomenon. If you are downsizing, it may make sense to wait as well. The time it makes sense to sell is if you are considering moving up to a larger home. Why? Let’s take a simple example: You are selling a $250,000 home and looking at a home to purchase in the $400,000 price range. Let’s say you
take a 20% discount on the home you are selling, so you sell it for $200,000. But when you buy the $400,000, home you get it 20% under value as well, or $320,000. That would mean you took a $50,000 reduction on your sale but gained $80,000 on the new purchase. The opposite is true when you downsize, which is why it would make more sense to wait until market conditions improve. —-SDE

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This is my blog. I am excited about sharing my ideas on mortgages and real estate related subjects.