| It's no secret that the real estate market is in the | | | | prices in the hopes of attracting a buyer, but |
| midst of a wide spread correction. Lenders have | | | | what I'm beginning to see is that all it seems to |
| tightened restrictions on sub-prime loans as well | | | | attract are people who are "just looking". This |
| as on prime loans. Owners are finding themselves | | | | often translates into people who are doing just |
| in seemingly inescapable circumstances. The result | | | | that, "looking" or those that aren't able to obtain |
| reminds me of the Hydra from Greek mythology, | | | | financing anyway. My suggestion is to adopt a |
| the one that had several heads and spit poisonous | | | | "Buy and Hold" position if you financial situation |
| fumes; not a very likable creature. The effects of | | | | permits. The property you have purchased still |
| these events are having sweeping effects on the | | | | has value as a rental unit and if lease is structured |
| current housing market. | | | | properly, you could position yourself to sell the |
| Then there are the small investors and For Sale | | | | property to another investor who is looking for an |
| By Owners (FSBOs) who for all intents and | | | | occupied property for some additional cash flow. |
| purposes are usually individuals who have invested | | | | In the meantime you get to enjoy the extra |
| a significant amount of their time and money to | | | | money coming in until a suitable buyer is obtained |
| obtain one or more properties with the intent of | | | | (or at a minimum mitigate your monthly |
| making some level of profit in the near future. | | | | obligation). If you have a busy schedule, you can |
| Many of these FSBO may have been involved in | | | | also employ a broker to screen tenants, show |
| flipping or rehabs a couple of years ago, but have | | | | the home and perform property management |
| since become a little gun shy in the current | | | | duties on your behalf. |
| market. | | | | Option 2: Get Professional Help |
| Now the banks and the FSBOs find themselves at | | | | Two or three years ago this may have been |
| odds because they are vying for the same | | | | thought of as a waste of money to most FSBOs, |
| qualified buyers in a buyers' market. Previously | | | | because after all real estate agents just push |
| this wasn't an issue since the foreclosure rate | | | | paper around and collect a check right? Nothing |
| was relatively low and the banks were seemingly | | | | could be further from the truth, especially in a |
| loaning money to anyone with a pulse. The | | | | buyers market it is important for a FSBO to use |
| problem with this match up is that the banks | | | | all of the resources available to them to sell the |
| have the luxury of both time and resources to do | | | | property at the right price as well as negotiate |
| what it takes to get these homes sold. So how is | | | | favorable terms for on your behalf. |
| a small private investor supposed to compete | | | | Option 3: Continue to Buck the System |
| with the a bank who has the ability to wait as | | | | There are just some people that attempt to defy |
| long as necessary, undercut prices and limit the | | | | the odds in just about every situation, and some |
| number of buyers that get financed? | | | | of these people are pretty successful at it. But |
| On the other hand the FSBO group is finding | | | | for those of us without that cavalier approach, |
| themselves caught up in the wash fighting against | | | | swimming upstream against a strong current of |
| a flood of under priced homes retained by the | | | | double digit home inventory numbers, seeking |
| banks hitting the market and the normal flow of | | | | additional help may be more appropriate. |
| homeowners putting their primary dwellings on the | | | | A 1031 Exchange may also be a possibility if the |
| market. FSBOs are left paying a mortgage on a | | | | deal is structured correctly and you can find |
| home that just isn't selling. In Metro Atlanta both | | | | another project that may be more suited to the |
| the Georgia MLS and First MLS systems report | | | | market conditions. If you have never done a 1031 |
| single-family home inventory numbers in the | | | | Exchange it's a good idea to contact a Realtor or |
| middle-teens in October, up 5-6 points from the | | | | a lawyer who can fill you in on the details of how |
| three previous months. Some private investors | | | | to make the transaction a success. |
| have caught the hint and employed one of the | | | | A buyers market isn't the end of the world for |
| many discount brokers with similar results to just | | | | FSBOs and investors, but it certainly makes the |
| trying to sell the property themselves. If you are | | | | business of buying and selling your properties |
| a FSBO you should be very concerned. | | | | more involved. I advise all of the FSBOs that I |
| Ride out the Storm | | | | come in contact with to consider the services of |
| FSBOs need to act swiftly to take advantage of | | | | a Realtor when looking to sell their properties. |
| the current shift in the market. Instead of sitting | | | | Sure it may subtract from the bottom line, but in |
| on the property and shelling out the monthly | | | | the grand scheme that money ends up lost in the |
| mortgage payment on an empty home they | | | | additional mortgage payments and repair |
| have several options: | | | | allowances that are made due to an improperly |
| Option 1: Change your Tactics | | | | marketed or prepared property. |
| In a buyers market the tendency is to just lower | | | | |
