Friday, January 21, 2011

What Buyers can learn from the Stock Market


Real estate and stocks aren't often compared to one another unless your speaking of a REIT (real estate investment trust) or a stock in a company that focuses on real estate. Most of the time however they are mutually exclusive of one another.

While my career is in Real Estate I've dabbled in more than my share of stocks and share a passion for investing in companies and trends in the stock market. I've made far more mistakes trying to be the next Warren Buffet than I'd care to share however but have learned often more during these set-backs than I have during times when I've been right.

The one thing that I've learned that I can relate to the real estate market for today's buyers is that you shouldn't try to "TIME THE MARKET PERFECTLY".




Timing the market perfectly is a gamble that is never mastered. Even if prices fall a bit more in your area, mortgage interest may rise later in the year offsetting the drop. If your in the market for a new home, now is the time to get off the side-lines and make what could amount to be one of the better investments of your life. If your thinking about investing in real estate and want to purchase a rental property, also a great time to do so.




Of course when making a bid, have some research done to determine what comparable homes have been selling for over the past three to 6 months. Then make a bid 10% below that average number and in some cases more if the area is extremely distressed with foreclosures.




In contrast however, if your area has a home thats been listed at a very strong price and your comps suggest that it is, multiple offers are not uncommon even in this market. Your agent can contact the listing agent to find out about additional offers and if this is the predicament you are in, keep your offer as competitive as you feel you can. This however does not mean to let emotion get the best of you during a bidding war as many homes will be available if this bid doesn't work out for you.




If you are hoping to buy a home soon, another rule of thumb is to keep any and all other big ticket purchases on hold until you have successfully found and closed on a home. Do not purchase a new car, take a new job, or pay any loans late. This could all adversely affect your approval when it comes to the ability to get a loan.




Hope these suggestions and thoughts on the market are useful to you! As you take the next steps towards your new home be sure to find a full time realtor that knows the business, can be counted on to look out for your best interests, and is reliable.




Please forward this and any of my past blogs to anyone that you feel may find this useful information and thanks again for taking the time to read my blog! Ben



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