Buying in a Declining Market

Buying Real Estate in a Decling market is one of the best time to buy. You can get great deals on property when the supply of Real Estate is high. Buy when everyone is selling and sell when everyone is buying is a good rule of thumb.

With the meltdown of the sub-prime industry, it seems financing, tightening credit and higher rates are causing more difficulty for retail borrowers to get funding. This creates more advantages for people who are poised to purhcase at great prices.

Many investors buy long term investment properties in a shrinking market. With analysts predicting many foreclosures over the next few years, buying properties suitable for rental often makes great financial sense. Buying properties that are in need of cosmetic rehab, such as carpet and paint, helps you gain instant equity but keeps costs low enough that rent can be set at an affordable rate.

When buying in a declining market you will be safer to stick with fixed rate mortgage products versus an adjustable mortgage. No one knows for sure when the market will bounce back from a decline and you do not want to have an ARM that may adjust when property values are falling making refinancing difficult.

Potential properties to purchase in a declining market are those going into foreclosure. In today’s market finding a property with equity is recurring more often. First time homebuyers have a higher probability of finding a more affordable home to purchase in a declining market.

When buying real estate in a declining market it can be advantageous to find a motivated seller. A motivated seller may provide a greater price reduction or other incentives to help you make a profitable real estate purchase.

Don't be afraid to ask for seller concessions when buying in a declining real estate market. You can have the seller buy down your interest rate, or pay your settlement charges.

If you buy at the right time in a declining market, there is a great chance you can get an unreal price on your purchase and flip the property a few months down the road for a substantial profit.

» DISCLAIMER: The information contained in this article on 'Buying in a Declining Market' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.