Thursday, June 4, 2009


In the mid '90s when I was a stockbroker and and it was the middle of the dot com rise and fall, I heard a lot of the same things I am hearing now regarding asset value.

With the recent changes in the real estate market (which I will not characterize by any one term, as different markets are experiencing vastly different scenarios), you are hearing the same laments: “I've lost $XXXX on my home!”.

Well, new flash: You HAVEN'T.

Sure, you're probably experiencing a decline in asset value, but that really doesn't come into play unless two scenarios exist:
1)You want to leverage more of your home equity for a loan. or
2)You're looking to sell you house and get top dollar for it.

This was the same in the dot com rise and fall. “I lost $XXX in the market” No, you didn't. Yes you lost it if you sold at the bottom of the market, but who would intentionally do that? Isn't that what business is about? You buy when the prices are advantageous (low) and sell when there is an opportunity to make a profit (high).

So what's the missing factor here? What is the catalyst that turns this mundane and common-sense situation into one that keeps us up at nights?

Confidence. Actually, Fear which relates to confidence.

This causes us to doubt our decisions, doubt our future, and worry about our present.

The only time you really have cause for concern in this market are if a couple of circumstances exist:

1)for whatever reason you HAVE to sell your home and the market in your area is a strong buyer's market.
2)You need to leverage your assets for credit.
3)You have had some other change in your life and are no longer able to afford the payments.

If none of those scenarios exist or have a strong probability: get over it!
Markets fluctuate.
That is the only certain thing about them.

The strongest position to have in any declining market is the ability to buy in when opportunities present themselves.

Don't you often wait to buy something you've your eye on, like that big screen TV when it's on sale??

Do you worry about how the sale price will affect the value of the TV you already own?
Not likely.

So, the lesson here: it's a buyer's market, so as long as your in a position to buy, then do so. Take advantage of the low priced opportunities, government assistance, credits, any all the other incentive available to you, as long as it doesn't financially compromise you and put you in a risky situation.

And if you don't have to sell then DON'T.

Which means you will not have lost money and when the market tides shift and it becomes a seller's market again, the value will again increase.

Real Estate opportunities abound in the current climate. And in many areas, investors with cash, and first time buyers are clambering over each other to snatch up real estate bargains. This trend is accounting for about 50% of real estate transactions right now, and it is affecting the markets by defining “bottoms” and creating signs of a turnaround in SOME markets.

Are you feeling better now? You should be.

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