real-estate

Tips for Understanding the Real Estate Market Before You Decide to Buy

Purchasing a home is one of the most significant financial decisions you will ever make. Real estate developer Dov Hertz aptly points out, “A real estate transaction is like walking through a minefield. Those who are successful are able to sidestep and pivot when necessary. Those who don’t end up stepping on the mine and blowing it up.” Understanding market trends is crucial to navigating this complex field effectively. Here are some essential tips to help you understand the real estate market before making your purchase.

Analyze Previous Data

Historical data provides valuable insights into how the real estate market has performed over time. Look at trends in home prices, sales volumes, and inventory levels over the past few years. This information can help you identify patterns and anticipate future market conditions. Sources like Zillow, Realtor.com, and local real estate associations are good starting points for accessing this data.

Know Your Supply and Demand

The principles of supply and demand significantly influence real estate markets. When demand is high relative to supply, prices generally rise, creating a seller’s market. Conversely, when supply exceeds demand, prices may fall, leading to a buyer’s market. Understanding this balance can help you predict price fluctuations and assess the level of competition in your desired area.

Keep an Eye on Interest Rates

Interest rates have a direct impact on mortgage affordability and, consequently, the real estate market. Lower interest rates make borrowing cheaper, increasing buyer affordability and driving home prices up. Conversely, higher interest rates reduce buyer affordability and can lower home prices. Stay informed about Federal Reserve announcements and economic forecasts to track interest rate changes.

Review Economic Indicators

Economic indicators such as employment rates, GDP growth, and consumer confidence provide insight into the broader economy. A strong economy typically leads to higher housing demand as more people are in a stable financial position to buy homes. Conversely, an economic downturn can depress home values and reduce demand. Pay close attention to local economic indicators as they directly impact your target market.

Observe Seasonal Trends

The real estate market exhibits seasonal trends influenced by listing supply and price dynamics. Spring and summer often see higher demand, more listings, and elevated prices, making it a busier buying season. Fall and winter generally experience slower sales, presenting opportunities to find better deals as inventory increases. Understanding these seasonal fluctuations can help you time your purchase for the best possible outcome.

Research Local Market Conditions

Dov Hertz emphasizes, “Real estate is local; hence, you need the pulse of the place you want to invest.” Factors such as the local job market, school quality, crime rates, and infrastructure developments can all impact property values. Gather local information from city planning departments, real estate agents, and local news sources to get a comprehensive view of the market conditions in your area of interest.

Pay Attention to New Developments

New housing developments, commercial projects, and infrastructure improvements can significantly influence property values. While new developments can increase housing supply and stabilize or lower prices, they can also enhance property values if they improve the area’s amenities. Keep up with news from local government and real estate sources to stay informed about upcoming developments.

Use Real Estate Reports

Periodic reports from real estate companies and professional associations provide in-depth analyses of current market conditions and forecasts. Reports from organizations like the National Association of Realtors, CoreLogic, and local real estate boards offer insights into home prices, sales volumes, and market trends. These reports can be invaluable in making informed decisions.

Consult with Real Estate Professionals

Dov Hertz advises, “Real estate negotiations are personal. Create a relationship with the person on the other side.” Building relationships with industry professionals such as agents, brokers, and financial advisors can provide personalized insights and up-to-date information about the market. Their expertise can guide you through the complexities of the real estate market and help you make well-informed decisions.

Understanding these aspects of the real estate market will better equip you to make informed and strategic purchasing decisions. By analyzing data, keeping abreast of economic conditions, and consulting with experts, you can navigate the real estate minefield with greater confidence and success.

You may also want to read : NYC Developer Dov Hertz discusses Developing Iconic NYC Sites on a Podcast

real-estate

Strategies to Secure the Best Real Estate Deal

Purchasing real estate can be an intimidating process, but with the right strategies and approach, you can secure the best possible deal. Whether you are buying a property as an investment or a home, effective negotiation is key. Here are some essential tips to help you achieve favorable terms when working on a real estate transaction.

Conduct Thorough Research

Before entering any negotiation, it’s crucial to be well-informed about the property, neighborhood, and market conditions. Familiarize yourself with comparable sales in the area and understand the property’s history and potential issues. “I’ve seen the smallest, immaterial issues blow up a deal,” cautions real estate developer Dov Hertz . “Solve problems, don’t create them,” he advises.

Secure a Pre-Approved Mortgage

Having a pre-approval letter from a lender demonstrates that you are a serious and credible buyer, which can enhance your bargaining position compared to buyers who have not yet secured their financing.

Understand the Seller’s Motivations

Identify the reasons behind the seller’s decision to list the property. They may need to move quickly due to a job relocation or face financial difficulties. Understanding the seller’s situation allows you to tailor your offer to meet their needs while securing favorable terms for yourself. “Real estate transactions are personal. Create a relationship with the person on the other side,” Dov Hertz advises.

Start with a Competitive Offer

While making a lowball offer might be tempting, it can backfire in a seller’s market. Instead, present a competitive offer that reflects the property’s market value and the insights gained from your research. A fair offer shows the seller that you respect the property’s worth and are serious about the purchase.

Be Willing to Walk Away

One of the strongest negotiating tools is the willingness to walk away. If the seller’s terms are unfavorable, be prepared to move on. This mindset can protect you from accepting a bad deal and remind you that there are always other properties available.

Find Win-Win Solutions

Successful negotiations often hinge on creating win-win scenarios. Be open to making reasonable compromises to accommodate the seller’s needs, but ensure that these compromises do not make the deal unfavorable for you. A cooperative approach can foster a positive negotiating environment and increase the chances of success.

Use Contingencies Wisely

While contingencies protect you as the buyer, too many can make your offer less attractive. Include only essential contingencies, such as financing, home inspection, and appraisal. Avoid overloading your offer with numerous “what ifs” to keep it powerful and appealing to the seller.

Optimize Timing

“The key to negotiations is also a matter of timing,” says Dov Hertz . Making an offer at strategic times, such as the end of the month or during a slow market, can work to your advantage, as sellers may be more eager to close a deal.

Include an Escalation Clause

In competitive markets, an escalation clause can be advantageous. This clause automatically increases your offer by a specified amount above any competing bids, up to a maximum limit. This ensures your offer remains competitive without initially overpaying.

Manage Your Emotions

Real estate transactions can be emotionally charged, but it’s crucial to remain objective. Letting emotions influence your decisions can lead to overpaying or agreeing to poor terms. Focus on your goals and the facts to make rational decisions.

By following these tips, you can navigate the real estate buying process more effectively and secure a favorable deal. Conduct thorough research, secure mortgage pre-approval, understand the seller’s motivations, start with a competitive offer, be prepared to walk away, find win-win solutions, use contingencies wisely, optimize your timing, consider an escalation clause, and manage your emotions. With careful planning and strategic negotiation, you can achieve a successful real estate transaction.

Listen to a recent podcast by Dov Hertz – Founder @ DH Property Holdings, LLC.

real-estate

Tesla wins U.S. antitrust approval to buy SolarCity

Tesla Motors Inc has won U.S. antitrust approval to buy solar panel installer SolarCity Corp , moving closer to its goal of creating a carbon-free energy and transportation company. The Federal Trade Commission said on Thursday that the deal was approved. Tesla said in July after it made its first offer that by acquiring SolarCity the two companies would form a one-stop shop for clean energy, offering consumers solar panels, home battery storage and electric cars under a single brand.

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Tesla wins U.S. antitrust approval to buy SolarCity

real-estate

U.S. agency rolls out refinance program for homeowners

The regulator of Fannie Mae and Freddie Mac unveiled on Thursday a program aimed at homeowners who are paying their mortgages on time but whose loan-to-value (LTV) ratios are too high to qualify for traditional refinance …

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U.S. agency rolls out refinance program for homeowners

real-estate

Goldman Sachs to invest $184 million in Brazil storage company: executive

Goldman Sachs Group Inc will invest 600 million reais ($184 million) in Brazilian storage company Metrofit over the next 6 years, betting on a recovery from the harshest recession since the 1930s, a company executive said on Friday. Metrofit, founded in 2012, is a joint venture between Brazilian real estate company TRX and U.S. company Metro Self Storage. The self storage business is growing in Brazil, despite the recession.

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Goldman Sachs to invest $184 million in Brazil storage company: executive

real-estate

Bayer waiting for Monsanto to engage after spurned bid: sources

Bayer, however, has no plans to increase its offer without first reviewing Monsanto's confidential information, the sources said on condition of anonymity because of the confidentiality of the talks. The Leverkusen-based company needs access to Monsanto's books before it can decide whether it can pay

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Bayer waiting for Monsanto to engage after spurned bid: sources

real-estate

Exclusive: Amazon is preparing to launch streaming music service – sources

By Julia Love SAN FRANCISCO (Reuters) – Amazon.com Inc is preparing to launch a standalone music streaming subscription service, placing it squarely in competition with rival offerings from Apple Inc and Spotify, according to two people with knowledge of the matter. Amazon is finalizing licenses with labels for the service, which likely will be launched in late summer or early fall, the sources said. Amazon, which …

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Exclusive: Amazon is preparing to launch streaming music service – sources

real-estate

Exclusive: Redstone’s NAI talking to bankers about options for Paramount – sources

Sumner Redstone's National Amusements Inc is consulting investment bankers about strategic options for Viacom Inc's Paramount Pictures, including a possible stake sale, sources familiar with the situation said on Friday. National Amusements, which controls 80 percent of the voting shares of Viacom, is also keen to extract more value from the film studio's real estate holdings in Los Angeles, said the sources, who spoke on condition of anonymity. It is unclear what

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Exclusive: Redstone’s NAI talking to bankers about options for Paramount – sources

real-estate

China orders banks to clear hurdles slowing private sector lending: sources

SHANGHAI, May 14 (Reuters) – – China's banking regulator has sent an urgent notice to banks telling them to clear bottlenecks slowing lending to private firms, sources with direct knowledge told Reuters, highlighting rising concern in Beijing about torpid private investment. Chinese banks sharply cut new lending in April after a record first-quarter credit spree, much of which appeared to go to the state sector and may have helped inflate asset bubbles in real estate and commodities. According to the document seen by Reuters, the China …

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China orders banks to clear hurdles slowing private sector lending: sources

real-estate

What First-Time Home Buyers Learn By Themselves

Statistics show that people are waiting until later in life to get married, and that puts marriage and home buying right alongside each other. Most people tend to find stable careers later in life, and thirties seem to be the new norm for starting a family. The flip side is that there is a lot of growing up to do in a very short time span.

There are things first-time home-buyers easily get misled by, for instance, like the prevalence of pre-payment penalties (they exist, but brokers disclose this and you can ask about it). Another thing first timers learn on the fly is that cash buyers can quickly ruin the home of one’s dreams with a single phone call.

There are a ton of first-time home buying blues you can get if you let yourself get bogged down. It’s a process, and not always a pretty one. The important thing to keep in mind is that you will eventually find a beautiful home to improve and love as your own.

Foreclosures Are Not Always Deals

The media conditions us to associate foreclosures with deals, and that’s not always the case. In fact, most of the time a foreclosure means “trash heap.” There are certainly foreclosures offered far below market value, that happen to have the benefit of being in a good area. However, you have to be aware of all potential variables that could raise flags. Inspections are a must when purchasing a foreclosure, and not every deal allows for that, or grants enough time for something thorough and convenient. Investors purchase foreclosures on hard data, but individuals have little more than their personal experience and their eyes to judge. If the property is up to your standards, it’s worth considering. Just be aware that there a host of issues that could go wrong that you and your inspector may not notice. Things like electrical or plumbing issues might crop up only after the house is lived in.

By all means, look at foreclosures and be aware of the potential for the market. Just be open to the idea that not everything is a positive. You may find that saving for a higher down payment and moving to a nicer area are better ideas.

Pre-Approval is a Must

One of the best things you can do for your prospects is to pre-qualify for a loan by talking a broker and submitting some paperwork. Real estate transactions are all about speed. The faster you are prepared to move on a deal, the more likely that deal is to happen for you. Pre-approval is especially useful when you need to relocate, as your broker’s approval will extend to just about anywhere you move. In some cases, agents will advise you not to hunt for properties until you have pre-approval, just because it makes the process harder.

However, pre-approval comes with a few bullet points you need to be aware of. It’s not a guarantee of a loan at a certain rate, it’s just the bank saying that your documents seem to be ok at a cursory glance. Pre-qualifying may also mean that you don’t pre-qualify for the loan you thought you did. Typically, pre-qualifications are done before a credit check occurs.

Talk to your bank about getting pre-qualified and pre-approved for a loan. Starting the process now will be better for you in the long run.

Negotiate over Fixing Costs

Any home that you move into is going to have something that you’ll want to change to meet your tastes as the home owner. DIY is a great option for most projects around the house, but that doesn’t count fixes that need to be done prior to moving in. When your inspection is performed, the inspector will present a list of items he believes are in need of repair. Some common examples are things like electrical outlets or air ducts in a central air system. Most of these fixes are relatively inexpensive, but you should not have to pay for these as the new owner because they were not caused by you. When it comes time to negotiate on things like cost of the house, or costs to close, you can get a bit of wiggle room if you make a few phone calls to contractors and ask about pricing.

Also, don’t forget to check every outlet and every sink. Six months after your move-in date is the wrong time to discover you have a leaky faucet or pipe in the wall.

Acquire a Trustworthy Agent

A good real estate agent is someone who guides you through the process, and helps you to understand more about the investment you’re making. They will do their best to review your property suggestions, and make a few of their own. They should be knowledgeable in loans, but don’t expect too many specifics from them on that regard. What they will know is the area. They will help you find resources related to schools in the area, as well as fun things to do and a bit of history about the region. Behind the scenes, they also handle your negotiating for you. You give the agent an idea of what you want, and they help to communicate that between you and the seller. A trustworthy agent is someone advocating for you throughout the sales process. It’s not about commission, it’s about service.

The agent is paid at closing, so you shouldn’t have to pay upfront to see a home. Sellers will sometimes pay agents to market their home in other ways, but most of the money they make comes from the sale of the home itself.

Conclusions

A first time home buyer has a lot to worry about. It can be difficult to deal with the financial reality of buying a home while you’re trying to browse for something that meets what you want out of life. The two sometimes cloud each other, and can obfuscate what you really want. The important thing is to go with your gut, read documents carefully, and communicate openly with your agent and your spouse.

 

Bio: Realty ONE Group is owned and operated by Kuba Jewgieniew, a former stock broker with experience in data-driven sales. Realty ONE Group is a lifestyle brand that manages Realty ONE Group Cares, a charity foundation that strives to better the communities served by Realty ONE Group and its agents.

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