Home & Real Estate Investor News Dec 2005
 A publication of The Association Of Home Investor Specialists

Welcome to The Home And Real Estate Investor from IAHIS and  USHomeInvestor.com. If you no longer wish to receive this newsletter or product updates from The Association please follow the instructions at the end of this email to remove your name from our mailing list.

To access this update online, click here www.ushomeinvestor.com/tips

In This Issue

When Investors Bail ...

Markets Cooling

Investor Coaching

Investing In A Cooling Market

Title Insurance

When Investors Bail ...

A real danger in a slowing market comes from investors waiting until the last minute to sell in the hope of hitting the highest price. It is worth remembering that the real estate market is not like the stock market. It's not possible to "stop-loss" a home sale. Once the market starts to slow, if your real estate investment isn't sold you had better be willing to hold it for the long term or take a hit on the price to sell it ahead of your competition.

So how should you react to the current news? It's true newspapers are playing up stories of a real estate slowdown because that's what sells newspapers. When investors read these stories they get scared. The smart investor goes to their Broker and asks for up-to-date research on their own local markets. Just because home sales are slowing in Boston doesn't mean sales are slowing across the country. And let's not forget the time of year. After thanksgiving sales always slow down significantly.

To read the full story online go to
http://www.ushomeinvestor.com/news/AHIS120805.htm

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Historic Sales Cooling

The national median existing-home price for all housing types was $218,000 in October, rising 16.6% from October 2004 when the median price was $187,000.

Total housing inventory levels rose 3.5% at the end of October to a 4.9-month supply at the current sales pace.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.07% in October, up from 5.77% in September; the rate was 5.72% in October 2004.

Single-family home sales in units dropped 2.5% from September, but were 3.3% above the unit level in October 2004. The median single-family home price was $216,200 in October, up 16.6% from a year ago.

Nationally, existing condominium and cooperative housing sales fell 4.4% from September. October 2005 sales activity was 6.7% above October 2004. The median condo price was $229,800, up 15.3% from a year ago.

To read the full story and check regional stats online go to
http://www.ushomeinvestor.com/news/NAR112805.htm

Your Projects: If you have photos of a recent/current home investment project that you'd be willing to share with your fellow investors, please let us know. We may write an online "before and after" story around your project.

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Mortgage Rates Rising?

With the steady increase in Fed rates the general consensus appear to be that rates will continue to rise. In addition, lenders are being put under pressure to apply more stringent qualification criteria to borrowers, making it harder for buyers to obtain marginal financing. All this will continue to have a dampening effect on the real Estate market.

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If you are an experienced investor and would like to get involved as a coach and mentor or you are interested in getting help from a coach, just go online and fill in the inquiry form.

www.UsHomeInvestor.com/coaching

Investing In A Cooling Market

Over the past few years many real estate investors have been able to buy and sell property and make a healthy profit without having to do anything but hold onto the property for a few weeks or months. As the market cools, easy profits are no longer there for the taking.

In a slowing market it's still possible to make sound investments with careful analysis before buying. (This means that if you've managed to make money to-date without careful analysis you should be warned that it's easy to lose money by over-paying for a property and finding you can no longer sell it for an automatic markup on what you paid).

A cooling market is indicated by an oversupply of homes compared to the demand. This can be brought about by buyers dropping out of the market and/or by too many sellers listing property for sale at the same time. Initially, a market moving from under-supply to over-supply can see to a big swing to a buyers market as buyers hold back, wary of over-paying, and sellers rush to sell before the market drops.

This process naturally levels out as the sellers that don't need to sell take their properties off the market.

Shop around for owners who need to sell and who are willing to negotiate a lower price to get a quick sale. Don't forget to factor in your costs to renovate the property and make a profit after sales commissions. If the price isn't right for you, simply move on to another property; don't get emotionally involved in any single property, as there will always be another to replace it.

Rentals, Condos & Foreclosures ... To read the full story online go to
http://www.ushomeinvestor.com/buyers/cooling_market.htm

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Title Insurance

When purchasing real estate you want to be sure the Title is clear of any encumbrances. Your attorney or escrow company normally takes care of this through providing a Title Search and a Certificate of Clear Title. However, even though the Title Search reveals no issues with the title there can still be problems that surface after the sale. These problems can be expensive or impossible to resolve.

Title insurance was introduced to insure a buyer against defects in the Title of property they are purchasing. Although a lender may require Title insurance, this is typically only to cover the value of the loan on a property. The Buyer has the option of extending the insurance through a one-time payment to cover the balance of the equity in the property. Title insurance comes in two forms, basic and extended. You may want to opt for extended coverage.

Although very few Title issues arise after a sale, not taking the additional insurance can be very expensive.

Take the owner who purchased a home with a pool that was encroaching upon a neighbors yard. The attorney for the buyer missed this in the survey report and the sale went ahead. Fifteen years later, the owners decide to sell and the new buyers discover the fault in the Title just prior to closing. The sellers now have to fix the problem at their own expense because they had not purchased extended Title insurance when they purchased the property. (This is a necessary simplification of a longer story).

Attorneys usually receive a commission from Title Companies for selling the insurance so you could ask your attorney to refund the commission to you.

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