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Correction Curve

By
Real Estate Broker/Owner with Heartland Real Estate Corp
"Correction Curve" Well let me take a few moments to explain what this is. The housing market is going to experience what I am calling the "Correction Curve", think about it, what the bank will finance is really what the market will bear, unless we have a frenzy market again and CASH buyers inflating the market (that is a whole other subject coming soon), anyway, if the a property is being purchased with a mortgage, then the bank requires an appraisal. An appraisal is really only ones opinion with a calculation of other factors. These main factors are other sales with in the market area and homes that are close in comparison to square footage and actual year built. Ok back to Correction Curve, right now in this market there are foreclosures closing, investors getting out of a bad investment at any cost to save their credit, short sales and true sales at true market value. Once these properties close and is recorded these are then used in the calculation process of an appraisal for a loan. Even if a purchase for contract has been accepted by buyer and seller at a price higher than the appraisal the buyer has a "loop hole" out of the contract in the financing clause. Property must appraisal at mortgaged value, so make sure when writing an offer on a property to consult with a professional Realtor on how to get you out of the contract if it does not appraise at full purchase price (again another subject for another time,,,, coming soon). Now back to the correction curve process, and again this is my theory, so take with a grain of salt. Once several properties have closed at lower than market value the values in general decline and in an inflated market this will create a correction of price therefore correction curve. What this can mean to you as a seller, you should absolutely consult with a professional in your market place and get a fair market value. If you really want to sell, I am finding there are buyers at the right price, but if your intention is to "test the market" or "fish for a buyer" than now is not the time to put your home on the market (unless of course it is priced at fair market value). Marketing your home with a professional is only to your advantage. Use their expertise and also, it literally cost you nothing unless the home is sold. Now for the buyers, I have mentioned this before, never has there been a better time to buy (of course except to prior to 2003), buyers are getting great interest rates, a huge inventory to pick from, and now the correction curve price is all in your favor of being able to buy a home at a better than fair market price. So.. if your looking to buy or even do I dare say INVEST, go for it. Get with a Realtor and start looking at the market and making offers, you never know what might be accepted.