The Real Estate Market in 2006 (For Buyers)

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Many individuals and investors buying real estate in 2005 and still owning the property had a bruising year in many markets albeit not all. Many got caught up in a seller’s greediness and overpaid the true market value. Some found themselves in a multiple offer auction trap and ended up paying well above the original asking price for the property. Or new construction was purchased that was on a builder’s spec list and subject to continuing price increases unrelated to increased costs. The rationalization for many buyers was “who cares” the market is spiraling upward and when it comes time to sell, all will be well, we hope…

Investor Owned Real Estate

The evidence continues to mount that a correction of sorts is afoot in many real estate markets. Investors and real estate agents themselves who have properties they own on the market are getting increasingly nervous and this is and will translate into lowering prices particularly during the next few months. Keep in mind these lowering prices may well be off of grossly inflated asking prices. Many investor owned residential properties now on the market may have been purchased 1 or even 2 years ago and have been tenant occupied. Typical leases run for one or two years and the property is likely to be put on the market 2 to 4 months from the termination of the lease thereby minimizing negative cash flow.

Owner Occupied Real Estate

Most homes that are owner occupied and for sale aren’t owned by investors or real estate agents. Most states require real estate agents to divulge their ownership regardless of whether they are occupying the property or not. However investors are not subject to the same requirements.

Buyer Considerations

Once you have narrowed down the number of homes you are potentially interested in it’s time to do your own due diligence.

1. Whether you are using a realtor or dealing with a seller directly, find out what type of seller you are dealing with and whether investor, real estate agent or owner occupied.

2. Particularly with newer construction but with any property, determine what the last purchase price was and the last sale date. This information is a matter of public record and most county property appraisers have the information readily accessible on the internet, usually through the county maintained website. The information will include the actual property address and the name(s) on the property deed. Be advised most systems are not maintained real time and there may be a lag of a few months before a recent sale is reflected in the property records. If you suspect the property has been recently purchased and immediately put on the market for sale, call the county property appraiser or tax assessor’s office with the exact property address and ask for the latest available information that may not be posted on their website. If you are working with a real estate agent and the house under consideration was previously listed and sold from the Multiple Listing Service (MLS), your realtor can find out the actual selling price.

3. Find out what the sale prices for comparable properties have been in the neighborhood you are considering. Start with the same street and then expand to sub-division and then reasonable proximity to the property under consideration. Here working with a realtor makes this step easy, if not the information is public record however more difficult and time consuming to obtain.

4. Find out what the asking prices for comparable properties are in the neighborhood you are considering. Again, look at the same street, sub-division and a reasonable proximity to the property you are looking at. A key factor here is the days on market (DOM) and what the listing price history has been if on MLS. This information is generally only available to realtors and is not available to the consumer and is not available to realtors or consumers if the property is non-MLS. Also many variations in that a home may have been listed with different brokers and under different MLS numbers and even different MLS systems.

5. Knowing the available inventory of homes on the market in the area under consideration, length of time on the market and recent (over the past 6 months) sales will provide valuable information when formulating an offer to purchase.

6. When considering an offer price, take into account all the due diligence you have done and all the information you have collected. The asking price of the property you are considering can fall into many categories. Grossly overpriced, overpriced, market priced or under valued. The asking price is driven by many factors and obtaining the property for what you believe to be a fair price (to you) should be your ultimate objective.

About the Author

Carol Lorenc & Richard Lorenc (http://www.homeinjacksonville.com) sell condos and single-family homes for Watson Realty Corp., and live in St. Augustine, Florida. The Lorenc’s have lived and worked around the world in Asia, Europe and Latin America and specialize in working with foreign real estate buyers.

The Real Estate Investment Market In 2006: Why Experts Are Excited And New Investors Are Nervous

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Copyright 2006 Chris Anderson

Are you confused about where the real estate investment market is going and what you will do in 2006? Well join the club since many, many people are in your situation. I will tell you that many savvy investors are getting very excited BECAUSE the market is changing.

In this week’s article, we are going to conduct a little exercise to clarify what is really meant by The Real Estate Investment Market. Suppose that you read the below article in the New York Times. How do you react? As we go forward, let’s compare your reaction to this information with the reaction of savvy, real estate investors who have been there, done that.

Beach Front Condo Project Bankrupts Local Investors January 11, 2006, Pogomo Beach, FL (APE News)

The struggles of a new, 220 condo unit show the continuation of the real estate bubble. When local real estate agent Daffy Duck was interviewed, he said that some condo values have dropped over 40% in the period since July 2005. The last sale we had was at a high value of $850,000 but now you would be lucky to get $600,000.

APE News has learned that one investor is now having to make mortgage payments of up to $5,000/mo on each of their 3 units. In turn, this is forcing them into bankruptcy. Upon further analysis.

Before you read the rest of this article, I encourage to step back and jot down your knee jerk reaction to this news. Why? Because you will undoubtedly see such real estate investment headlines in the future. If you can sort of your feelings about these types of stories, then you will be miles ahead of most investors and determine how to best profit. People typically have two reactions to this article:

Reaction 1: Articles like this indicate that the overall real estate market is getting soft.

Reaction 2: In flat, soft, or declining real estate markets, it is very risky to invest.

Unfortunately both reactions will limit their ability to produce creative, profitable, real estate investments.

Let’s see how a more experienced investor might think. First, this article would tell the investor that the real estate investment market for $850,000 condos in Pogomo Beach Florida has probably dried up. On the surface, it would appear that both the rental and sales demand are low for THAT particular product in THAT particular area. We will use this knowledge to our advantage in a minute.

Second, the investor knows that this news tells them nothing about OTHER real estate products in Pogomo Beach. For example, the demand for affordable, $250,000, off beach townhomes could be blistering hot in Pogomo Beach. For that matter, who knows what is happening in the single family home market. THESE REAL ESTATE INVESTMENT SUBMARKETS CAN ACT COMPLETELY DIFFERENT THAN THE $850,000 CONDO MARKET.

Let me illustrate this point in real life. While writing this article, I am flying to Las Vegas to look at a development that is a condo conversion. Before I left, I have seen several news pieces about high end, on the strip condo developments terminating in Vegas; clearly not great news for high end condo, real estate investments.

On the other hand, we know that Las Vegas area still faces an issue with an ever increasing population, is land locked, and has a shortage of affordable housing. I also know that because of our group size at GetPreConstructionDeals.com, we are getting offered an interesting opportunity to get in first. Time will tell if this development is appropriate for our web site, but we know without seeing it that this submarket of Las Vegas has considerable potential; all the while the popular press has a dim view of the Vegas real estate investment market.

Another insight that the sophisticated investor knows is that huge returns can be made in soft or down real estate investment markets; i.e., they understand that all markets do not always go up but there is money to be made regardless of what the markets are doing. To understand this concept, let’s go back to Pogomo Beach and see what we can do.

Suppose your believe as an investor is demand for beach front condo’s will be extremely strong. Yes, there may be a hiccup for 12-24 months but the fact remains there is little beach front left and a lot of baby boomers who want to own it —– someday. When looking at the above news article, maybe the investor decides that if purchased for $485,000, then the Pogomo Beach condo would be quite attractive and likely to generate a nice return in time. But even at that price, maybe they are not ready to rush out and acquire a unit.

Next, maybe the investor understands that some people bought into this project very cheap at preconstruction prices and might be quite happy to get out with some profits rather than having to make mortgage payments month after month, deal with tenants, have to furnish the unit, etc. Quite possibly the investor might be interested in purchasing a unit if they can get the right price let’s say maybe $395,000. If somebody excepts that offer, then great, they have just bought themselves a great investment for a real estate product in a soft market. Yes, they are going to have to rent this out for a while to let the market catch back up to them but they know they have just purchased a great asset for a tremendous price.

Hopefully by using this fictitious article as a training example, you have gotten a better understanding of your believes about how to handle 2006. In addition, with this background, maybe the next time somebody asks you what the real estate market will be for [fill in the blank], you can give them a highly accurate answer: some people will make a boatload of money and some people will lose money. While this will not satisfy them, you know that it will be true in almost every active real estate market in the country.

About the Author

Dr. Chris Anderson is the founder of http://www.GetPreconstructionDeals.com and is referenced in many venues including the New York Times and USA Today. Get his weekly, thought provoking articles by signing up today!

South Florida commercial real estate market sluggish in first two - Fort Lauderdale Sun-Sentinel

South Florida commercial real estate market sluggish in first two - Fort Lauderdale Sun-Sentinel
Commercial real estate woes are spreading across South Florida as fears intensify over the worsening economy. Office and retail sectors have turned sluggish in the first two quarters of 2008 following steady growth during the past few years. Firms