Archive for June, 2010
Property Market Update and the Consequences for Selling Property
Firstly let’s briefly look at what’s happened to the property market. In the summer of 2007 property prices reached their peak and mortgages up to then, had been easily agreed with 100% mortgages readily available. At this time 40% of the money that the banks lent to companies and consumers came from big financial institutions, often overseas and known as wholesale sources. According to BBC’s Robert Peston, the ratio of our borrowings in the UK (including consumer, corporate and public-sector debt) to our annual economic output rose to just over a record-breaking 300% (or over £4000billion) which is similar to the US’s ratio of debt to GDP. In August 2007 the wholesale sources became aware that much of their money had been invested in the US housing market which had already collapsed and saw that their investments had turned seriously sour. Unsurprisingly, they wanted their money back and didn’t want to lend more. When the banks paid the money back, some banks almost collapsed and were only saved by bails out of billions of pounds of taxpayer’s money. And at the same time, the sources of funds for borrowing dried up. It’s a time of unprecedented change in the global economy.
So now the UK banks have less money to lend to businesses and consumers, in the way of mortgages, and only customers considered risk-free are approved. With far fewer mortgages being made available there are less buyers. With less buyers, the property prices drop and when the price drops buyers who can secure a mortgage want to wait until the prices have bottomed out, and with the property prices still falling banks are not keen to invest in them…. and so the downward spiral continues. A global recession is nearly upon us and more companies are likely to need government bailouts. Unemployment will rise and tax revenues will shrink. It’s a gloomy outlook.
So with this backdrop it is not a good climate to sell a house.
As a seller, do you really need to sell your house now? Check your reasoning – do you need to sell your house or do you want to sell your house or is it a mixture of the two? Sit down and carefully go through the reasons why you are selling. Can you delay selling your house until the economy and property prices have turned around? Although lending will not return to the heyday of the previous years, stability will come, and those buyers currently waiting to buy property will then buy and prices will begin to rise again. In addition, because prices have dropped homes are becoming more affordable with the average house price to earnings ratio being 4.56 in November 2008 compared to 5.84 in July 2007. This will support the housing market when it returns.
But when will it return? According to the pre-budget report credit conditions will stabilise “beyond 2009″ so that may mean early 2010 (though predictions vary). The worst time to sell could be in about 6 – 9 months time which will be when house prices have fallen further, sellers will be afraid of how much further they will go and the country is likely to be in the midst of recession. If the market begins to recover from 2010 house prices will then slowly go up from a peak to trough fall of around 20 – 25% (though again, predictions vary widely). How long will it take to recover to 2007 prices? Well, this can’t be answered as it’s simply an unknown but it is likely to be a number of years.
If you have to sell now, be aware that buyers are waiting to snap up a bargain and offers will be low. Be realistic from the outset about what you are prepared to accept and have a time line of when you need to sell by. Neither of these can be guaranteed of course but by thinking through them you will be better prepared to price your property accordingly. This may save you months of waiting and gradually lowering your price. Obviously you don’t want to do this especially is that would mean getting into negative equity. But if you need to sell then you need to consider that you could be better off taking a low offer before the market bottoms out. You need to work out your figures and price accordingly. Speak to your estate agent (and others) and ask what other properties in your area are going for. Gather as much information as you can to make a decision.
Selling and moving house is a very personal decision and many areas of your life are affected. Decisions may include wanting to downsize to lessen the pressure of outgoings, or to emigrate, or start afresh elsewhere. Moving house often signals a new chapter in your life and it’s worth remembering that the reasons for wanting to move may outweigh the reasons for needing to move.
Selling and pricing your property to sell may be a difficult decision to make in the current market but a low priced property will attract the buyers that do, after all, exist and who are watching and waiting for the right opportunity.
Susy Copus
http://www.articlesbase.com/real-estate-articles/property-market-update-and-the-consequences-for-selling-property-681693.html
709 C Mosby Rd. COLVILLE WA 99114
View full virtual tour: http://www.justsnooping.com/tours/2456790/
Duration : 0:6:17
760 N. Jefferson COLVILLE WA 99114
View full virtual tour: http://www.justsnooping.com/tours/2567823/
Duration : 0:3:48
Successful Real Estate Investing
One of the best roads to wealth in America has always been the acclimation and development of good, solid, income-producing real estate. Real estate ownership is one of the best ways to achieve financial independence for the average person. But in order to be a successful real estate investor, you are must become above-average in your knowledge and understanding of how the real estate market works.
There are five basic requirements that you must follow to succeed in real estate.
1. Write out clear and specific goals that have time lines on them. Set a goal for the exact type of property you are looking for. Do want a single family property? A duplex? A four-unit property. You must be specific. Set a goal for getting the money you’ll need to purchase the property. Always make sure your goal has a time line for when you will acquire the property. Will it be six months or a year? Set goals for the amount of real estate you intend to purchase in the next three, five, and ten years. The very act of writing out set goals for yourself in real estate will make it much more likely that you’ll have the success you are aiming for.
2. Write out a detailed plan of action, listing everything you are going to do, organized by priority. The combination of goals plus detailed plans will give you a blueprint for real estate accumulation that you can begin to follow on a day to day basis.
3. Make a plan to learn every detail of the real estate business. Because the potential rewards are so high in real estate, they will go to those who have done their homework and paid their dues. It’s very important for you to become an expert at real estate before you begin investing your time and savings in real estate acquisition.
4. Be prepared to back your plans with hard work, sacrifice, and persistence. Going into real estate is very much like starting a business. There is a tremendous amount that you have to learn and you can only learn by experience. There will be ups and downs, successes and failures, and you must be willing to persist patiently throughout, knowing that you will be successful in the end.
5. If you are really serious about building something lasting and worthwhile in real estate, resolve to get into real estate for the long term, for a minimum of ten to twenty years. Real estate investment is not something that you jump into and out of. It is something that you step into very carefully, and should be prepared to hold onto for a long time.
Many people who purchase real estate, hold it for a long time and then sell it just before it starts to rise rapidly in value. They become impatient when they hear about other people making quick or easy money by flipping real estate properties.
The definition of investment real estate in its simplest term is: “Real estate is its future earning power.” Let me put this another way: “Real estate is nothing more and nothing less than its future earning power, its value at some future date.” In other words, the value of any piece of real estate is determined by the income that can be generated by that property when it is at its highest and best use, from today and on into the indefinite future.
An important question that you should always ask when you are considering any real estate investment is, “When and how will income or wealth be generated on or by this piece of property, and in what amount?” The correct answer to that question tells you how much the property is worth today and how much it is likely to be worth in the future.
Even though interest rates are at all time lows and property values are increasing at record levels, there are still foreclosures happening at record levels today, because of so many people losing their jobs. Having said this as a warning, there are many things that you can learn and do, starting with very little money, to begin building your financial independence in real estate.
If you do not have much money but have lots of time, and you sincerely desire to enter into the real estate field, the simplest way for you to start is to buy homes that need work and fix them up, thereby increasing their value. This is where many successful real estate investors and entrepreneurs begin their careers.
Here are six basic steps you need to follow if you are going to buy properties and fix them up.
1. Do your market research thoroughly and look at houses until you find one that is under priced relative to the neighborhood, because it is run down and needs a lot of work. A house that is under priced is one that is selling for 20% or more below what similar houses are selling for in the same area, based on the cost or sales price per square foot. For you, this type of home could be what is called a “Sleeper.” It can be more valuable than it appears on the outside.
2. Purchase the house at the lowest possible cash down-payment and get the seller to carry back a second mortgage or deed of trust for the property. Your ideal purchase of investment real estate is always to get the very best price and terms. Price and terms are often more important than any other single factor. If you can get a low enough price and generous terms you can make almost any property into a successful investment.
3. Move into the house and begin working on it on the weekends to renovate and refurbish it, doing all or most of the work yourself. Many husbands and wives have launched themselves toward financial independence by working as a team to buy and fix up houses, approaching this as a family project.
4. When you have fixed up the house and yard so that it is attractive again, you can then do one of three things. You can sell the house for more than you paid and take the profit from the sale and buy another house to renovate. You can rent out the house at a rate that covers your mortgage payment and hopefully gives you extra cash flow. Or you can rent out the renovated house and then refinance the property, often for as much as you paid for it, based on the higher earning power of the property when you rented it.
5. You can then repeat this process with another house, again doing the renovations yourself until you have fixed it up and you are ready to sell, rent, or refinance the second house as well.
6. As you increase your assets, your cash flow, and your experience, you move up to buying and fixing duplexes and eventually apartment buildings.
There are two main advantages to buying properties and then fixing them up yourself: First, you can do it while you keep your full-time job, continuing to generate cash flow from your job for repairs and renovation. Second, you can start small, with little or no money, little or no risk, and expand your activities as you gain more knowledge and experience.
Making money in anything, especially real estate, is hard work and requires persistence. Everyone with a property for sale wants to get as much of your money for it as he or she possibly can. Your job is to see that they don’t. So, if you are willing to do your homework and take your time, you can make prudent and profitable real estate purchases and sales.
You make your money when you buy real estate, not when you sell. You make your profit in real estate by buying right, by buying the right property at the right price and at the right terms. When you sell, you simply realize the profit that you made at the time of the purchase. Another important rule for investing in real estate is this: don’t become emotional about a property that you are purchasing for investment. Always look at the property from the viewpoint of a critical purchaser.
Purchasing real estate of any kind requires careful thought and analysis. Just remember that you are buying the long-term future earning power of a piece of property. You are purchasing the property as an asset and nothing more. Always remember, real estate is only an asset if it puts money into your pocket.
These rules are all food for thought if your are planning to become a real estate investor. These are some basics that you need to know to get started in the field of real estate. Read books and attend seminars on a regular basis in the field of real estate. Go out and look at properties every week that are for sale, even if you are not ready to buy. By doing this you will be gaining valuable experience. Nothing can take the place of knowledge and experience, especially in the field of real estate.
Millions of men and women have become financially independent by investing in real estate, and with the proper knowledge and experience, there is no reason why you cannot do it as well.
Copyright© 2005 by Joe Love & JLM & Associates, Inc. All rights reserved worldwide.
Joe Love draws on his 25 years of experience helping both individuals and companies build their businesses, increase profits, and achieve total success. He is the founder and CEO of JLM & Associates, a consulting and training organization, specializing in personal and business development. Through his seminars and lectures, Joe Love addresses thousands of men and women each year, including the executives and staffs of many of America’s largest corporations, on the subjects of leadership, self-esteem, goals, achievement, and success psychology.
Reach Joe at: joe@jlmandassociates.com
Read more articles and newsletters at: http://www.jlmandassociates.com
Article Source: http://EzineArticles.com/?expert=Joe_Love
