Timing the Bottom of the Market
In just the past few weeks, we’ve seen a myriad of economic news that has had a tendency to keep real estate investors on the sidelines. We’ve seen continued gyrations in the stock and bond markets. We’ve seen a Federal Reserve that continues to chase the snowball downhill; one that will continue to cut rates in the weeks and months ahead because it waited too long to act in 2007. We’ve seen mortgage rates on
30-year-fixed-rate loans fall to 5.25%, spike to 6.25% and now fluctuate in the midrange. We see a falling dollar, rising inflation and soaring commodity prices. All this news has a way of keeping many real estate investors paralyzed on the sidelines, as they contemplate investing in this market. “How low will she go?” they ponder.
I am convinced that very few real estate investors, if any, will actually time the market just right and pick “the bottom,” although many are seemingly making a go of it. We have already seen billions upon billions of dollars lost in a market that everyone seemed to think would never stop rising. In the same way that no one saw the top, no one will know when or exactly what will cause the turn from our declining market to a sustained or rising market. One thing is for sure, it will happen and most likely in an unannounced and swift fashion. The markets will form a bottom and rise again. The motivation and flexibility that sellers afford buyers today will be long gone, and real estate will regain its good name as being the best long-term investment available in the U.S.A.
Real Estate Benefits
The benefits of owning real estate go way beyond appreciation; something many investors have forgotten today. The primary benefits (in addition to appreciation) include cash flow, equity build-up, and excellent tax benefits. These considerations should not be overlooked when investing for the long term in real estate. The appreciation will return positive; and buying now, at or near the bottom, is the best way to enhance that “appreciation” benefit.
Consider This
Rental demand is stronger than ever in most residential markets, pushing up rents approximately 4% per year. Vacancies are shrinking as poor credit is rising and lending guidelines are tightening, making it more difficult for borrowers to obtain financing. When you consider all these “investor” benefits, along with low interest rates and an overall price correction in the market, is any real estate investor a
fool not to be buying as much property as possible today? It’s a question one must think about seriously.
Although many, myself included, have been hurt to varying degrees by the turnaround in real estate values, it does not change the fact that today presents the most incredible buying opportunity for real estate we may ever see. There are “buys” out there that are simply incredible. They are Xtreme as I like
to call them; quite Xtreme!
Identifying Value
Here in my home state of California, we continue to find individual buys that are Xtreme., we have developed a unique software program that enables us to search and locate property and instantly determine the value for any given property. Value is different than price, and our program identifies that in seconds.
In the past few months,We have been involved in numerous multiple-offer situations. Yes, you read that correctly. We have represented numerous buyers and investors on their purchases in the past few months where we were NOT the only buyer trying to buy that property. Why? Because the property value was Xtreme; it was priced well under market value and was a great investment opportunity.
When property is priced well enough, it definitely draws attention—fast attention!  The buyer who finds and gets an offer in on that property first often gets the prize!
Obtaining the Deals
Structuring such an offer for our clients requires experience, timing, and attention to detail.  Relationships with other agents may also play a role in this intricate process and oftentimes contribute to the success of getting an offer accepted. Knowledge of dealing with banks and REO properties cssertainly plays a key role as well.  All of these factors are crucial in today’s market and something buyers and investors are seeking out in an agent who would represent them.
I invite you to be an investor and take advantage of this incredibly Xtreme buyer’s market.  These Xtreme properties will be snatched up quickly by someone.  The question is, will it be by you or someone else?
Bill Barringer
Real Estate Broker
The Barringer Team
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