Ideas and Opinions from Donald Trump and TrumpU Faculty.
Buying Unsold Homes: There's No One Strategy that Applies
News has been coming in from around the country that documents - without a doubt - that American builders have built far more homes than they can possibly sell in the coming months. That’s good news for would-be real estate investors who want to buy houses at rock-bottom prices and wait for the market to turn around.
The problem is, there is no “one-size-fits-all” strategy that can be used across the country. When you dig down past the national trends, you realize that the housing glut plays out quite differently in different parts of our country.
In Oregon, at least one developer is offering cash incentives to buyers, instead of just lowering prices. Why cash incentives? Because buyers can use the $12,000 to $14,000 incentive cash-backs to buy down the interest rates on their mortgages. So a savvy investor, if the numbers work, can increase cash flow and help the numbers work better on houses they will rent and sell later.
In Silicon Valley, it is projected that it will take 16.8 months for all the single-family homes on the market to be sold - up from a projection of 7.6 months one year ago. We’re talking about expensive properties for the most part here - the median home price in many homes hovers around $600,000, for example. And those statistics do not apply to new homes exclusively. But those figures amply document the reality that upscale properties, not just lower-priced new homes - are available to well-capitalized investors who can make the numbers work.
In Naples, Florida and surrounding areas, 12,000 housing units were for sale in January. WCI, a large builder, recently cut the price of one of its carriage-house-style condos from $629,999 to $340,000. But that’s because 44 percent of their buyers in the last quarter of 2007 nixed the deals and backed out. It’s an opportunity alright. But you had better work the numbers and keep your eye on the demon cash flow.
It all seems confusing, right? But it needn’t be, provided you get the kind of focused and specific advice you need to understand the trends in your area and act accordingly. A low price might represent a great opportunity, or it might not. Moving quickly might be a brilliant move on your part, or it could be an invitation to disaster.
I urge you to download our free report, What Makes Real Estate the World’s Best Investment? now to learn more. There has never been a better time to act - but wisely - to secure you place in the real estate recovery that is to come.
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3 Comments
I have a suggestion for Donald's next "Apprentice" which would be another type of charity show -- to take over the mortgages of a number of failing homeowners who are going into foreclosure. The "Apprentices" would have to find the most needy people from a pool of failing homeowners which the Trump organization has found -- and the reward would be that that winning team's failing homeowners would have their mortgages paid for and their homes reinstated to them. I think that America would love it! Certainly I would!
Possible Solutions For Poor Market Sales:
1. Lower The Sales Price
I do believe that there are some solutions for the housing market crisis at hand. One possible help might be an all-out drive among real estate sales people to convince sellers to lower their prices if they can -- even to the lowest possible price they can accept if they truly need to sell their homes fast. The largely inflated home prices of the last few years have basically squeezed first-time homebuyers and moderately incomed people out of the housing market. The result is that it has come to a point where the pool of buyers is very slim. If prices are lowered, this might open them up to a new pool of buyers and help to sell some houses.
2. Housing Auctions:
Next, perhaps "Housing Auctions" might also help some people -- the starting bid would be low, but would cover the sellers' expenses so that they could move on... People love auctions! Realtors could even televise them in certain areas. Have entertainment and finger food advertised and that would bring a big group of potential buyers. Buyers would have to be screened by realtors however -- of course. If realtors embraced this they might have more success with sales. I saw one of these auctions on TV a few months ago. It was very entertaining and the buyer did sell his house at a reasonable price.
The Foreclosure Crisis:
Perhaps some good lessons for future buyers would be to stay away from adjustable mortgages if they cannot qualify to make monthly payments which would take into account higher interest rates. For example, they might be able to afford a 6% starting rate but would be derailed by an 8% rate!
Counseling To Low and Moderate Income Homebuyers:
At least the real estate sales person should evaluate each buyer's financial means and recommend to them things that they can truly afford and the types of mortgages which would not derail them should interest rates jump. All of this is possible and perhaps should be taken into consideration as a new type of "Home Buyer Counseling" to buyers with low finances. This might be a good way to go now and in the future.
Setting The Prices On Homes:
The lesson to the real estate professionals is to see that when listing prices go over the top it can hurt them in the long run. While they can make much money in the "high" markets, disaster can strike when the bubble breaks -- and everyone can lose for years to come! (NYC seems exempt from this however.)
Real estate professionals set the prices on homes. Much caution might be needed in the future to avert the type of problems we are experiencing now. Perhaps the whole price setting arena should be revisited emphasizing "moderation?" If "moderation" is an evil word, what word is worse -- "stagnation?" -- which is the current market situation and driving realtors into the poor house. Even more scary -- how long will this last? The Real Estate industry should look out for itself where these practices are concerned. What good is it to rake in the millions in the "high" market years but then go out of business when everything "drops?" That makes no sense. I think that serious consideration should be taken to keep market prices reasonable so that all the various pools of buyers can access it thereby keeping business booming and not going under.
Realtors
One (or a few I think) builder here in Vegas offered no payments on their mortgage for 2 years. Keep in mind that's 2 years of no principle payments. Make sure if there's no payments for 2 years that they are actually "paying" the payment and not postponing it.
John
http://www.eventurebiz.com
When stocks are up the-rent it attitude only perpetuates poor living conditions and homelessness beyond what is manageable.
As I have seen so much pollution in the United States I can't help but think how this is evidence of how the US has broken their own kind.
Let me introduce you to the overflowing communities of women and children who are homeless, take that journey with me, and then tell me -rent it stocks work.