When house prices are dropping and the number of foreclosures are rising there’s one sure way for a homeowner to survive — hang on tight.
If you’re a homeowner or real estate investor, be prepared to stay through the bad times even if a real estate bubble bursts and home values go down where you live.
Remind yourself that historically, the real estate market always comes back. If you buy and intend to live in your house or hold it as an investment for the long term (15 + years), you’re not likely to lose.
Don’t sell. Ask yourself how serious the problem is. If you weren’t planning to sell right now, does a bursting real estate bubble really matter?
If you’ve rented out some properties, make sure your tenants are happy. If you’ve got good tenants who pay their rent on time, make every effort to keep them.
Don’t let white-knuckle fear about your future finances or herd behavior play a part in your decision whether or not to sell. And you have time think about these decisions — real estate markets don’t collapse in 3 to 6 months.
If you’re stressed and you’re finding it difficult to meet your mortgage payment – or you’re having trouble paying rent – talk to your lender immediately to see if you can restructure your loan to wait out the slump. (See eHow’s: “How to Beat a Foreclosure on Your Home.”)
Before you sell, consider what you might lose if you do. One of the biggest perks of owning or investing in real estate are the tax breaks you get for paying interest and making improvements. Remember you get those benefits no matter what.
If you do decide to sell, make sure it’s part of a well thought out plan.
If you sell, also be sure to talk to realtors about what you can do to make sure your house sells quickly. (See eHow’s: “How to Sell a Home in a Slow Real Estate Market).
If, despite your best efforts, no one is buying your home, think about what you can do with your realtor to offer more favorable terms to attract a potential buyer.
Avoid declaring bankruptcy even if you have to sell at a loss. A bankruptcy will ruin your credit rating and make it difficult to get back in a cheaper market where you might be in a position to buy as good a house as the one you sold for much less.
If you have cash in hand and plan to buy in a falling market, don’t bank on a quick appreciation of the property. Buy properties below market, and make sure you have a get-out plan if the market worsens and the investment isn’t working out for you.
Sellers should pay attention to timing. Houses sell best in June and there’s a big drop off in September when kids go back to school. December is a dead market month.
Research shows that sellers often under price in a rising market and overprice in a falling one. If you need to get rid of property quickly, make sure you price aggressively.
If you’ve never speculated in the property market before, when the market is falling is not the time to start. It could get worse. Wait until the market bottoms out.
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