Dean Graziosi

This real estate situation may be ripe for many who have saved enough and are in a comfortable situation in terms of finances. With the houses now available at amazing prices and the additional option of resale homes, the choices have become wider and interesting. In fact, the sales of resale homes have really picked up in the last three months and most states are reporting reduced inventory every month.

However, the inventory is going to rise once the banks impose the foreclosures on many homes they have been holding back. The reluctance in enforcing foreclosure was due to the mortgage modification or assistance programs. Since the economy has not revived in terms of employment, most programs have not had the desired effect, which has lead to even more foreclosures. In fact, some of the modification programs have acted as nothing more than stopgap measures.

Once the foreclosed properties hit the market nationwide, one can see another spate of price decrease, especially in the resale segment, which will have its bearing on the new constructions as well. What this would also mean is the buyer will have more choices and greater bargaining powers. The bargaining power could also be exercised to negotiate the interest rates and the total price of the house. Individuals with a good FICO score should ask lenders to give them the best interest rates, since the interest rates are falling every month.

In addition, there are more people defaulting due to the current economic slowdown and loss of jobs. Therefore, one has to sit pretty and make the bankers and sellers work for you. Sellers are also keen on getting the properties sold quickly since the forecast is further decrease in prices. There is also a segment of distressed sellers who are now not able to afford the home loan repayment and want out. This further increases the competition amongst the sellers; however, the need for cash will overcome most resistance and many would settle for less. If there are some who are ready to shell out good money in a shorter span, then the sellers can also look at much better (lower) deals. The key, therefore ,is money in hand and future payments.

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Times have changed.  Since December 2007, the recession has changed the way real estate agents transact business.  Those warm and fuzzy days of easy credit and rising prices have been replaced by excessive supply and not enough demand.  That is the reality of today’s real estate market.

Once upon a time, the short sale and the foreclosure action were rarities.  Now, these distressed sales are an important part of the real estate industry and recovery.  With one in every 355 residences currently in the foreclosure process, and with million of American homeowners under water, real estate agents have changed their focus.

As Charles McMillan of Coldwell Banker in Dallas said, “Foreclosures and short sales can offer opportunities for home buyers, but it is extremely important to have the help of a real estate professional for these kinds of purchases.” 

To assist real estate agents gain knowledge about foreclosure and short sales, a new certification has been created by the National Association of Realtors.  The Short Sales and Foreclosure Certification program (SFR) has been created to train real estate agents in this new phenomena.  The program includes training about how to manage short sale, foreclosure and real-estate owned transactions.

The association is actively distributing the latest updates about private and government programs aimed at helping these transactions take place.  Bringing resolution to this aspect of the real estate market is key to stabilizing housing prices and clearing out excessive inventory. 

McMillan explained the Realtors feeling about the dilemma.  “Unfortunately, there are situations in which people just cannot afford to keep their homes.  A short sale can help families protect their credit by avoiding a foreclosure.  When a foreclosed or REO property is sold, it helps the surrounding community by reducing the impact of those properties on home values in the immediate area.”

Real estate investors who are purchasing large blocks of short sale properties have the comfort of knowing that there are now certified short sale and foreclosure experts.  These agents can help put the package together and clear the inventory at the same time.    

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There is no such thing as a typical real estate investor.  Every real estate investor has their own goals, their own game plan and their own area of expertise.  The one thing all real estate investors have in common is a belief that in real property ownership is wealth.  Perhaps, Will Rogers got it right when he said about real estate, “they aren’t making it anymore.”

Real Estate investors develop land, purchase one family residences, multi-family buildings, office buildings, industrial property and office buildings.  While most real estate investors specialize on one area of expertise, others wear different hats depending on market conditions.

Experienced and successful real estate investors begin with a plan.  Just as one would develop an investment strategy for equities, the real estate investor should do their homework, set their budgets, arrange their financing and define their real estate investing personality.

A typical error of novice investors is to put the cart before the horse.  Investors who buy a property and then try to shape it into their plan or build a plan around that property have it backwards.  Savvy investors define the plan and find the properties that fit into the plan.

Real estate has allure, personality and sex appeal.  Yet, investors are not swayed by the thrill of a transaction or by a property’s possibilities.  Executing the plan eliminates the emotional factors that can arise in property offerings.

David Crowe, a Chicago real estate investor sums it up; “People fall in love with a property.  Who cares about the property?  I fall in love with a motivated seller.”

Crowe has it right.  There is nothing like a motivated seller to ignite the flame under your real estate investment strategy.  Develop your investment strategy, stay within its confines and stay true to your numbers.  The really good news is that these days, they are building those opportunities and there are plenty of motivated sellers.

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