There isn't much that can prepare you to deal with the current real estate market we are in. The double digit mortgages of the 1980's, WRAP mortgages and the early 1990's when in many markets appreciation took a holiday! The current real estate market is a credit crunch that is testing everyone patience! We have would be home sellers that purchased homes with no money down and borrowed against future value only to find out there was no appreciation. There are home sellers that purchased with money down, but tapped into the equity to maintain their lifestyle - cruises, trips cars and purchasing second properties easily comes into mind. The hard thing to explain to many homeowners is that just because they owe a lot of money, it cannot come out of their home. The solution to a home seller's problem is not a for-sale sign. Many agents will accommodate the seller by placing a for sale sign on a property with a price of $450K in a $350K neighborhood because the agent cannot bring themselves to tell the truth. How does that help the homeowner if the home never sells? The reality is that home prices are set by the laws of supply and demand. Real estate agents cannot just pick the price out of the air. Property values must be justified via appraisals. If you borrowed against your equity - I hope you put some aside for a rainy day!
- Not every home increases in value.
- Some homes can decrease in value.
- Some sellers have to bring cash to closing to pay what they owe.
- What improvements have you made to the home in your ownership?
PS. Paint, roof repairs, replacing leaking hot water heaters do not count! That is maintenance!