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Mortgage and Lending

Hello and thank you for clicking on that litle link.  I am excited to be able to offer some really great information in this format.  Many people have requested information regarding various mortgage and Real Estate issues.  If you have a psecific question, please feel free to let me know. 


Buying Real Estate in a Declining market is one of the best time to buy. You can get great deals on property when the supply of Real Estate is high. Buy when everyone is selling, and sell when everyone is buying, is a good rule of thumb. With the meltdown of the sub-prime industry, it seems financing, tightening credit restrictions, and higher rates are causing more difficulty for retail borrowers to get funding. This creates more advantages for people who are poised to purhcase at great prices. Many investors buy long term investment properties in a shrinking market. With analysts predicting many foreclosures over the next few years, buying properties suitable as rentals often makes great financial sense. Buying properties that are in need of cosmetic rehab, such as carpet and paint, helps you gain instant equity but keeps costs low enough that rent can be set at an affordable rate. When buying in a declining market you will be safer to stick with fixed rate mortgage products versus an adjustable mortgage.  No one knows for sure when the market will bounce back from a decline and you do not want to have an ARM that may adjust when property values are falling.  This would make a necessary refinance difficult.  Potential properties to purchase in a declining market are those going into foreclosure. In today's market, finding a property with equity is occurring more often. First time homebuyers have a higher probability of finding a more affordable home to purchase in a declining market.  When buying real estate in a declining market it can be advantageous to find a motivated seller. A motivated seller may provide a greater price reduction or other incentives to help you make a profitable real estate purchase.  Don't be afraid to ask for seller concessions when buying in a declining real estate market. You can have the seller buy down your interest rate, or pay your settlement charges.  If you buy at the right time in a declining market, there is a great chance you can get an unreal price on your purchase and flip the property a few months down the road for a substantial profit.  Or, you can simply be happy that you bought a great house for a great low price. 

Comments (4)

great thoughts; I look forward to reading more in the future.
Aug 14, 2007 08:10 AM
Neetu Kainthla
BHHS Caliber Realty - College Station, TX
"If you buy at the right time in a declining market, there is a great chance you can get an unreal price on your purchase and flip the property a few months down the road for a substantial profit." If the property values are still declining how can you make profit in a few months?
Aug 14, 2007 08:15 AM
Troy Smith
Bloomington, MN
I think there are three keys to making this work. 

•1.                   We need to make a paradigm change from thinking that the price of the property is the culprit.  When the property doesn't sell, the first reaction is to lower the price and we've pretty well proven that doesn't work.  The price is not the culprit or reason for houses not selling.

•2.                   We need to find investment buyers for many properties and we need terms that enable them to be able to cash flow the property.  It is the terms that will move the property to an investor; not price.  Buying down the rate to 5.875% or 6.00% interest only might make it work, or cash flow for an investor.  Demand for rental properties is sure to increase if it hasn't already.  But if it's an investor or not, the terms the seller can provide through seller's concessions and using a great mortgage broker is infinitely more important than the price.

•3.                   Finding five buyers with $200,000 in their pocket is much easier than finding one buyer with a million dollars in their pocket.  If a million dollar property can qualify as a vacation, resort, or second home, it can qualify for fractional loans.  Check out Matcom web site www.matcommortgage.com  to learn about fractional loans; you will be amazed at what fractionals can do for a realtor's business and/or a developers business. 

The bottom line is this:  In any market downturn there are folks who have record years.  There will be mortgage brokers and realtors who have record years in 2007 and 2008.  And the answers are mostly related to making some serious paradigm changes.

Aug 14, 2007 09:23 AM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

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Mar 22, 2018 04:54 PM