Stages Of A Real Estate Market

The stages of a real estate market are most often recognized only after the fact. Even when all the historical data confirms that a downturn is in progress, most speculators won’t stop gambling. Real estate speculators call themselves investors because they believe they are taking calculated and controllable risks when purchasing homes.

In the mid to late 1990’s real estate investing was virgin territory because it was easy to use formulas of 60% to 70% of Fair Market Value minus repair costs to determine an offering price for a seller. The “chant” was “Get as many properties under contract because they can only go higher!” In the earlier years, buying properties cheaply enough allowed them to be rented and they supported themselves while the investor simply collected checks. In only three years, a groundswell of speculation led to frenzied buying. Families looking for a home to live in got caught up in the buying panic because of the scarcity of homes for sale. The market quickly and efficiently climbed with the help of lending institutions who were offering low interest rates, 100% financing, with no proof of the buyer’s income. Almost no other speculative opportunity in history caught on as fast because of real estate investors needing little or no money down and ease of loan qualification for “retail buyers”.

Even when many of the potential borrowers had credit issues and minimal down payments, the lenders created more lenient loan requirements. The number of single family homes that were owned by investors rose from 2.5% in 1995 to almost 29% by the end of 2006. Effectively, these investors took away at least 26.5% of available single family homes with the intent of selling them at higher prices to retail home buyers.

Here is a summary of the stages of a real estate cycle:

Stage #1 This is where supply closely equals demand and home prices fluctuate between +/- 3% per year and prices are basically stable over a five year period.

Stage #2 Here demand out-strips supply, or a “sellers’ market” develops because of fewer homes on the market. This can be created by investor speculation.

Stage #3 – Here demand far out-strips supply with resulting large annual price increases. Homes now offer new speculators more attractive yields than stocks and money market instruments. More so called “investors” begin buying multiple properties with expectations of selling for huge profits because of the low down payments required for mortgages or using creative financing. The market begins to feed on itself as homeowners begin to rush to take profits.

Stage #4 As home prices become unaffordable, interest rates increase making financing costs too expensive for homeowners to purchase, and investors have inventory that can’t be sold. Seemingly everyone tries to sell and the market readjusts to former market conditions by pulling back as much as 30% to 60% of peak values as the market begins to stabilize for 3 8 years.

Summary – Based on the current market conditions and continuing available data, the real estate market is well into Stage #4. There is no way to determine how long this swing will last but historically they have lasted for 6 to 15 years. This stage offers huge opportunities for real estate investors and homeowners alike that want to purchase homes either for living in for 5 years+ for homeowners, or for “flipping” for investors. Both homeowners and investors looking to buy a property need to be very selective about how much they pay for a property, the amount of costs to rehab it, how they will be financing it, how long they intend to stay in it, the carrying costs, other properties currently listed on the MLS, and neighborhood conditions. Unfortunately, retail buyers who wait to get the lowest possible price often wind up paying higher mortgage rates which offsets the cost savings by waiting, especially when you include their cost to rent, and the interest tax-deduction that they lose by not owning. Investors will have to buy low and sell low, while the retail buyer has become “king of the mountain” in picking the best possible home for the lowest price.

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Hiring A Top Real Estate Agent The Key To A Good Sell

So you’ve decided to sell. Or buy. Either way, purchasing a new home is without doubt an important milestone in your life. If you are going to take this step, why not be smart about it and contact the top real estate agents available in your area? Selling or buying on your own is not out of fashion, but quite a risky and unwise process, from several points of view. A top real estate agent will, undoubtedly, guide you to make a good decision.

There are more ways to determine whether the expert you’ve chosen to help you is indeed a top real estate agent or not. You should probably inspect his negotiation skills before thinking of his other qualities. He needs to be a pro at whatever can get you a better price and better features for your transaction. The top real estate agents will be masters in the art of compromise and won’t even blink when they are all caught up in a battle” for their clients. Dedication and honesty towards you, the client, are also crucial.

In case you’re selling your home, you definitely need to begin seeing things from the perspective of the buyer. The top real estate agents will help you do this. You need to figure out what would motivate people to move into that house or that particular neighborhood, if there are any special facilities closely related to the area your house is located in and what kind of people would be interested in it. There are dozens of factors to think about when selling and tempting a certain targeted clientele, but as said, a top real estate agent can assist you in getting the best price for your property.

You also need to remember that getting your house evaluated is an essential stage in the selling process. You do, of course, need to test those which you consider to be the top real estate agents in the area by studying their offers and deciding which one of them charges less, but is also fit for the job. Be very careful with small details. A top real estate agent will most likely be punctual or at least come up with a valid reason for being otherwise. Keep in mind that you have to impress your house has to be tidy and looking squeaky clean before your agent even arrives. Think of him as a potential buyer you need him as interested as possible in what you have to offer in order for him to be enthusiastic with future buyers.

Needless to mention, information is the key. Before even taking any action, you definitely need to know everything about the procedure itself, plus the other prices offered for similar property in your area and so on and so forth. Use the Internet to your advantage not only regarding the real estate market, but regarding your agent as well – especially the services he is ready to offer. You need to be inquiring about the experience he’s had so far and if he’s got a team of experts ready to make the transactions as smooth as possible.

Finally, you have to be looking out for those few special touches that can greatly increase what people are ready to pay for your house. They’re likely to prefer a home with major improvements, rather than buy a basic one and take care of everything by themselves. The improvements have to be made professionally to save the clients a lot of time and effort spent for fixing things up. So try to take advantage and exploit these tips in your favor as much as you possibly can. If you really do have a top real estate agent, he will know how to sell your house if you have a patio or a well maintained garage. He will underline the qualities your property has in order to attract as many buyers as possible and sell for a high price.

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Real Estate Purchase 101: Tax Benefits

“Almost everyone knows that it’s better to own your house than to rent it. After all, when you pay rent, it goes to a landlord and when you pay down on a home, it goes to a future investment in a valuable item. But did you know that owning real estate can have other advantages, too? Specifically, did you know that there are a number of tax benefits to owning real estate that those people who just rent will never be able to take advantage of? If you’ve been thinking about purchasing a home but haven’t yet made the plunge, here are some of the tax benefits that you might want to think about:

Closing costs. In the year that you first purchase your home, you can deduct some of the closing costs on your taxes. This is true even if the seller was the one that paid your closing costs, meaning that you’re basically getting free money. This is only good in that first year, though, so you need to know about it in advance.

Home mortgage interest deductions. Every year, you pay mortgage on your home. And every year, you can deduct the interest of that mortgage from your taxes. Interest is deductible on any amount up to one million dollars of home mortgage so unless you’re buying a mansion, you can probably deduct all of your home mortgage interest.

Home equity interest deductions. When you take out a home equity loan, it will also have interest and this interest is also deductible on your taxes. Interest on up to $100,000 of home loan debt can be deducted.

Real estate tax deductions. You have to pay real estate taxes but you can get some of that money back as a deduction at tax time.

Remodeling improvement deductions. If you make major changes to your home, you may increase its value which ups the tax basis and saves you money later on.

Sale of your home. In the future, when you go to sell your home, you can actually get a tax break on the money that is earned from the sale. There are some rules to follow here (and it’s always best to work with a realtor and a tax attorney to make sure you’ve followed them correctly) but basically, if you lived in the home for at least two years, you can get at least $250,000 from the sale of the home tax-free.

Buying a home has a number of different benefits that you can probably think of on your own. But you might need help figuring out all of these tax benefits. Working with a professional who is knowledgeable about the ins-and-outs of home ownership tax deductions can help you to save money each and every year that you own your home. This means that when income tax time comes around and all of the renters that you know are groaning that they have to send money to the IRS, you’ll be smiling and tucking your savings away.”

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Factors Affecting Real Estate Taxes

Property investment has never been easy. One of the many things you have to deal with is real estate taxes. Estate taxes, when correctly dealt with, might help you in your investment while if not being done correctly, it can work against you.

Estate taxes come in many forms, but the most common forms of estate taxes are taxes that deal with the property that you have inherited or that has been given to you. This is something that varies from different states to different states, and also within the states. Also, you have to look at the type of property you own, the condition it is in, and also the location of the property to determine what types of estate taxes you need to pay.

The very first important thing to look at is looking at what type of property you are dealing with, and the value of the property. There are several different ways of accessing this, as there are several different pieces of property that are worth different amounts of money. You first have to look at the age of the property and what kind of shape it is in, and you have to also add in what type of property it is. It is a business or a home? Old or new? Have it been renovated? All of these factors are going to enter an equation for the type of estate taxes that you are going to have to pay on the property.

The other thing to look at is where the property is located. There are several states that have various types of estate taxes that you pay depending on what type of property it is and how much money you have invested in it. All of these estate taxes are going to be different so you have to be sure that you are focusing on where the property is so that you know for sure what kind of deal you are getting when it come to the estate taxes that you have to pay. Estate taxes can be very confusing but with the right information and tips, you can save thousand on taxes.

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