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Current Trends in Real Estate Markets

ArticleID 151  
Writer Isaac Thuku
Category Personal Article

Real estate markets have dramatically changed from what they were about six months ago. Investors are raking in huge successes in distressed properties, multi apartments and homes. Both residential and commercial properties have seen a strong rise in value and most investors, small and big are considering demand, location and sector while investing.

Home values have seen a gradual rise but have not reached their full potential. According to CoreLogic, home prices were up 11% in November becoming the best home appreciation since the recession back in 2005.

The biggest gains were investors who were buying distressed homes, renovating them and putting them up for rent. A good example is in Nevada, prices are up 25% from a year ago. Chicago, Charlotte and Atlanta are experiencing strong investor demand. However, prices are still small compared to the "sand state",where investors have priced themselves out of the market.

For small scale investors, large institutions are putting up their properties for sale and even offering financial assistance to small scale investors. A good example is Blackstone which is offering to lend investors a minimum of $500,000 who is willing to buy at least five properties. Big banks such as Freddie Mac and Fannie May are however skeptical and have put in place strict limits on investor financing.

While large scale investors are lending and selling their own properties, it is possible to see other companies most likely Blackstone financing the sale of their homes to small scale investors.

Apart from financial support, bonds are being offered by large scale investors that pay off. This may be considered risky but it is a bold move nonetheless since home prices are rising. Another strong point is multifamily apartment housing. Vacancy rates are high creating a good investment opportunity for anyone. The only downside is that there is a lot of online apartment supply. The best and easy way to be guaranteed success while investing in multifamily apartments is through Real Estate Investment Trust (RETI).

Office and retail sectors are not strong points to invest in. The reason behind the setback is that the market is not creating white-collar jobs to fill office spaces. The office and retail sector cannot be called off since they are doing well in places like Washington D.C, San Francisco and New York

The best deal so far in the real estate business is the warehouse sector. Though it may be considered not glamorous, reason being business such as shopping online requires retailers to have facilities to store their merchandize hence increasing warehouse demand.

Choosing between whether to live on a small or large town is another factor to key in while considering about real estate value. Commissions are also to be considered because brokers tend to charge more so that they can have a nice commission. A good example is in California where there are dozens of realtors and many of them spend nearly an entire year selling a handful of houses. When house prices go up, you rarely see commission rates go down; instead we witness an entry of more realtors. All commissions are always negotiable but keep in mind that if you offer say 5.5% the buyer's agent will be getting at least 3.5% and anything less will make the buyers not show any incentive in showing your listings when you decide to sell your home using brokers. In any case it will leave 2% for the listing agent. Also, keep in mind the many foreclosures that are out there. Most are usually at 6% and the selling agents get about half that percentage, or even more.

So, why don't commissions fall? There has been constant finger pointing at the restrictive practices by the NAR. This may be true but in reality it isn't. Think of it this way, why is it important to tip 15% of your dinner to a waiter in an expensive restaurant and not do the same with a diner waitress? Do the tuxedoed really have a harder job than diner waitress? The commonality between these different markets tells you that something is completely going wrong.

So, what does a real estate agent really charge? It's not what the agents really charge but what they cost you that is really important. It should be known that the law does not set the amount these agents charge. Real estate agents charge between 2.5% in metropolitan areas and around 4% in posh areas. When you are considering negotiating rates there are things to consider in order getting the best possible deal? They include one, do you consider or are willing to market selling your home? If so, a flat fee option is the best way. Two, is the broker offering a variable commission rate? This is an agreement where you pay a lower commission if the home is sold without involving any other agent. Finally, are you in a buyer or seller market? It should be known that a seller's market houses tend to sell faster and for more money.

If you cannot get a good agent to sell your home, no worries, consider a transaction broker or a real estate firm that will charge a flat fee to list the home being sold in the multiple listing service.

A home is considered by many as most people's largest investment and thus every consideration should be made when purchasing or selling a home. Preserving your home's equity should be your core point as well as maximizing the return on your investments.

Fact of the matter is, after mortgages are paid off, the real estate commission is the biggest expense in the sale of any home and a little negotiation upfront will certainly help you save a few thousand dollars and this will in turn greatly increase your ROI on your largest investment. You can always check online the homes being advertised and check whether they meet your standards.

Current Trends in Real Estate Markets
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