Do you think you are ready to join the bargain hunters in today’s real estate market? Are you ready to get that super deal on a new home or maybe even your first investment?
Well if you have been out of the market for a while, things have changed and we have some great inside information from Real Estate agents and investors in the Beach Street area.
Real Estate has really changed in the last decade. Up until 2002 the market was pretty predictable with an overall 3% annual growth rate since the 1930’s. In 2002 the bubble really took off. Banks relaxed the rules for getting real estate loans and that lasted until 2007 creating one of the greatest real estate bubbles of all times.
Dean Graziosi, the infomercial real estate guru, says that now is the best time to profit from real estate. He told me that his programs are booming and that he is making as much money as ever in real estate and so are his students.
So why is everyone avoiding real estate? The tough part is that no one knows where the real bottom is. Using some pretty solid statistical analysis and population models, the TV pundits say there is a possibility of a further decline up to 15%. After 50-75% declines from the late 2006 and 2007 peaks depending on where you live, another 15% doesn’t seem like much.
So what if you could get in today at the 15% off price and not have to worry about any further decline?
Paul Dolkas of Prudential Real Estate in Newport Beach says the number one thing is to be prepared. When a great deal surfaces it is going to go quick. Even if you find a gem that takes a little negotiating work, sellers want to know you’re serious. Paul tells his buyers to be ready.
There are several things you need to know up front. In this environment, getting funding is probably the most difficult it has been in anyone’s recent memory. In order to buy my current home this year, I had 5 loans pre-approved, not pre-qualified, but pre-approved. Paul Dolkas explains the difference like this: “ A pre-qualification is a guy on the phone saying that given what you told him, you can get the loan. A pre-approval is a bank looking at your credit, income and expenses and saying they they will give you the loan.” It is a very different process. One is free, another costs money. I paid the money.
Even after being pre-approved by five banks, when it came down to the last three days, three of them backed out completely saying “The standards have changed.” The last two had very different rates and fees at the last second. I saved over $10,000 by paying a couple hundred up front to each of the banks and getting pre-approved. Paul suggests you do that too.
Here are some other things you can do in advance to be ready when that 15% (or more) below market deal is staring you in the face.
- Have a buyers agent. One who is prepared to make 20 or more offers on your behalf to get a deal
- Get Pre-Approved for a loan from at least one if not two sources.
- Write down your goals. Why are you buying? Rental, flip or your own home? What features do you want?
- Write down what you don’t want. This will save you a lot of headaches and save your agent time.
- Communicate with your agent every change and why. Did your loan approval get reduced. Let them know.
- Be ready to hear a lot of “No’s” to get to the one “Yes” when you are looking for a deal.
Keep in mind deals come in all forms. You don’t have to find a rundown foreclosure or REO in order to find a deal. A slightly dated waterfront home might be a spectacular bargain. Recently a stunning waterfront home that had just been gutted sold for the same price the sellers paid before the $400,000 remodel. The remodel caused a divorce causing them to lose a huge chunk of money, and someone landed a really nice deal.
If you goal is to find a house you are going to stay in for a while, look around the neighborhood. Make sure the other people are neighbors you want to be around. A deal isnt’ a deal if you want to move in 6 weeks. Prepare upfront, and reap the rewards for years to come.