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Let’s Discover Who’s Buying Real Estate

Are YOU buying or are you afraid?

My intent with this series is to build a profile of today’s buyer of real estate.  While that seems simple enough let me first reveal the 500 pound gorilla in the living room?

It seems most people understand prices and interest rates are down.  When you combine that with the large inventory of homes currently for sale in many areas, and desperate sellers, you’ve just described the ultimate buyers market, even FRENZY!

Why then are we all so (the gorilla) SCARED TO BUY?

A theme of mine is not to dwell on the negative so I’ll ask this questions in the positive - Who is buying?

Just what is the profile of buyers who are wise and proactive enough to get themselves some real estate at fire sale prices?

Over the next 4 posts, with your help, we will discover that and maybe, just maybe, we can do our little part to stimulate this economy and help save some folks who really need it.  And, I bet you we’ll learn something!

Please tell me, who is buying real estate right now?  So now it’s your turn, click the comment button and tell me -

What do you think?

For most of my life I hated insurance.  It Seemed to me to be a lot of expense for noting of value.  Well, this changed.

I was riding my motorcycle, slowing to an intersection stop sign & out of nowhere a car with a beginning driving, made a left turn directly in from of me with no time to react.  I picked myself up 50 feet on the other side of that car & long story short, insurance, mine & theirs, paid the bills for about 5 years.  The amount they paid in claims replaced what was broken and would have paid my insurance premiums for the next 26 years.

I’m married, have raised 3 wonderful healthy children, and after they all left home, breast cancer came to call. it’s appearance produced a life of background stress and worry for 2+ years.  While we learned to produce the positive outcome and life we wanted instead of that which so many fear, the bills were paid.  Other than the uncomfortable “power surges” as my wife calls them, (hot flashes) that linger, my wife is now 5 years beyond recovery & celebrating the victory of a lifetime.

 You guessed it, insurance paid for all that, sums equal to 3.5 years of my income at that time, and in my late fifties, the biggest earning years of life, I was paid very well.

 Take it from me, let the companies who can afford to take the risk, pay the bills, you pay the premium, a small cost for shifting the risks in life?

What do you think and do you have a story to contribute?

  A financing client I’ve worked with for many years asked a difficult question last week.  He is contemplating turning his keys in on a home he purchased 6 years ago as part of his retirement plan.  His main concern how a foreclosure or short sale would impact his credit & if he really needed to be concerned about that with the number of people in situations like his.

For retirement planning purposes, he purchased this home and planned on big appreciation to make up for lost savings in the “Dot Com Bust” of 2000 & 2001.  The property value increased, he refinanced taking out cash to purchase two more properties.  He had a high leverage, high appreciation plan.

My answer was he did need to be concerned and that he would loose between 100 & 150 points in credit score.  Repairing this score will not happen quickly and for a period of at least 7 - 10 years my client will have less access to credit with increased expense for the credit he does get.  This in turn will negatively impact his ability to acquire additional financed assets he might use for retirement.

Although he called to discuss one property, he will soon need to address the other two which are high cost as well.  This strategy works well in rapidly appreciating markets which never last as long as normal or down market.

He would have done much better moving his profits to a lower leveraged property that could carry itself in any market.  That would have been a most powerful move.  Also, the financing on low leverage properties is slowly retired as tenants make their rent payments which increases equity.