After viewing a property that you decide you’d like to own, the next step is to make a formal offer to the seller. If you’re using a realtor they should be able to help with this. Basically the offer says how much you’re willing to pay for the property and the dates on which you wish to complete the transaction and obtain possession (NB the possession date is usually one day after completion).

The offer usually also consists of a number of conditions, eg being subject to a satisfactory inspection, receiving and approving copies of strata minutes and accounts, obtaining finance, selling your current home etc. You can add whatever conditions you like, but the more conditions you have, and the more demanding they are, the more likely the seller is to reject your offer – particularly if you are hoping for a significant reduction. Of course, the fewer conditions you include, the more likely the seller is to a substantial drop in price.

If you are considering a strata controlled property be sure to make sight and approval of strata minutes, accounts and by-laws a condition of your offer. One thing to check is that the strata ha sufficient contingency funds in its accounts. This is money to be used in the event of major works being needed such as roof repairs.

One way of avoiding a finance condition is to speak to lenders beforehand enquiring how much finance is available. You should be able to obtain an agreement in principle, but a lender will usually wish to carry out a valuation on the property to ensure the security of their capital.

The seller will accept the offer, reject it, or propose a counter offer (eg a price between your offer and the asking price). They may also seek to vary some terms of the offer, eg the completion and possession dates.

Once an offer has been accepted the buyer should endeavor to remove his/her conditions.

Property Inspection

You will most likely want to have the property professionally inspected before finalizing your offer. The best way to find an inspector is on personal recommendation, failing that you should ensure their qualification for the task, eg by their membership of a reputable body such as the Canadian Association of Home & Property Inspectors.

The inspection will almost certainly throw up some issues with your intended purchase. Don’t be alarmed; these may just indicate your chosen inspector is doing his job properly. Hopefully the issues are minor ones, but if major problems are brought to light you have several options:

• Ascertain costs of making good the problem(s) and revise your offer accordingly.
• Put the onus on the seller to make good the problem(s), with the requirement they provide evidence and guarantees for the work carried out.
• Walk away from the deal. Provided your offer was properly written you can freely do so.

A bad inspection report can lead to a lost deal, but is way better than later finding you’ve bought a turkey.

Finalizing the Purchase

Once the inspection report has been approved and the other conditions met the offer to buy is finalized. At this point a deposit is payable and the offer becomes binding. If you change your mind you will lose the deposit and can also be sued.

Once your offer is accepted and all conditions have been met you will need to engage a lawyer to handle the conveyancing, ie the transfer of title from seller to buyer. Once again, personal recommendation is a valuable indicator. Failing that, speak to a number of lawyers to obtain quotations. Don’t necessarily go for the cheapest, but consider also how efficiently your enquiry was dealt with.

In addition to transferring title the lawyer will also calculate the amount payable on completion. This may include adjustments for property taxes, utilities and mortgage interest, and any applicable land transfer tax.

You will need to ensure transfer of utilities before completion, and would also be sensible to arrange insurance for your new property.

Canada is probably the most beautiful country in the world and frequently nears the top of the UN quality of life tables (Human Development Index). Aside from that, Canada is a major destination for immigrants. All of these highly skilled and qualified people need accommodation when they land, thus the demand for good quality rental housing is high and likely to remain so well into the future.

Finding a Property

At present the majority of real estate transactions are brokered by realtors. All licensed realtors have access to the Multiple Listing System (MLS). MLS is a huge database of homes for sale across Canada. The advantage of MLS is that every realtor can search the listings of every other, thus saving an immense amount of time and shoe leather. MLS listings are also available on the Web at http://www.mls.ca/.

In addition to realtor listed properties a growing number of owners are choosing to market their homes directly, thus saving on realtor commission. Often the commission savings are partially passed on in the form of a lower asking price. The downside is a greater degree of expertise and work on the part of seller or buyer. Anyway, if you’re looking for real estate in Canada the “For Sale By Owner” (FSBO) listings are worth checking out. For example, see http://www.propertysold.ca/, http://www.homesellcanada.com/, http://www.fsbo-bc.com/, http://www.bchomesforsale.com/.

It is important to look at actual sold property prices rather than just asking prices in deciding whether to make an offer. Sold prices represent the amount people are actually willing to pay for particular properties rather than what sellers hope to obtain. Realtors should be able to provide this information, alternatively see the Royal LePage Survey of Canadian House Prices.

For strata properties (see below) be sure to check the strata by-laws for any restrictions on rentals, pets, other rulings. It would not be good to purchase a unit for rental and tehn to discover and owners only by-law.

The Strata System

Most apartments and condominiums and many townhouses are run under a strata system. Essentially, this means unit owners form a kind of corporation for purposes of managing and maintaining the complex as a whole. The number of strata members can range from a handful, to hundreds or more in the case of large condominiums.

Members of the strata periodically elect a strata council from their number. Basically, the strata council forms the “government” of the complex, arranging maintenance contracts, making and amending by-laws, applying sanctions to offenders etc. Major issues are determined by the strata as a whole.

Two types of management are in effect for strata properties, self-managed and professionally managed. Professional management is likely to cost more in terms of management fees but basically means the task has been delegated and individual owners can sit back and forget about it. Self-management is cheaper but requires more hands-on activity from individual strata members, eg notices will appear periodically requesting volunteers for this or that. NB in the case of large stratas the costs of professional management will not be significantly higher as they will be spread across a larger number of units. If you’re not into watering lawns or painting communal areas you may prefer to go for a professional management.

Using a Realtor

In Canada realtors must be qualified and licensed by the provincial real estate association. As with any profession the quality of individuals varies, but all should have basic competency and adhere to their association’s code of conduct. For sellers, realtor commission is not cheap, often in the region of 7% on the first $100,000, and 3% on the rest. However, for buyers, realtor services are free (being paid for by the seller.

It is common for both seller and buyer to use a (different) realtor. As stated above buyer’s realtors are free to the buyer (their fees are paid from the selling realtor’s commission). A buyer’s realtor will have access to all MLS listings and will be able to show you properties listed by any number of selling agents. The buyer’s realtor will help you write an offer, and should work for the buyer in any negotiations.

It’s important to choose a realtor with knowledge of the locality where you want to purchase. Personal recommendation is a good indicator. Otherwise select two or three realtors offering services for buyers from the numerous free real estate listings papers. Give them a call and choose the one you feel you can best work with. Buyers don’t usually sign contracts with realtors, so if you aren’t getting the level of attention you feel you should don’t be afraid to change.

A chain is where you wish to buy a house from Mr A, but Mr A is waiting to buy a house from Mr B, and Mr B is waiting to buy a house from Mr C etc. In view of the late stage of fixing a completion date chains occur all too frequently in English real estate transactions.

The only way to avoid getting caught in a chain is to limit your search to properties listed as “no chain” or “vacant possession” (unoccupied). It is also worth getting your lawyer to confirm this as part of the conveyancing process.

Gazumping and Gazundering

As we’ve already said the English real estate system is fraught with frustration as buyers and sellers may change minds or walk away right up to the last minute. Two common reasons for doing so are “gazumping” and “gazundering”. Though it’s hopes that readers will never encounter them it’s worth defining them here.

Gazumping is where a seller accepts one offer but keeps marketing the property and eventually accepts a higher offer. The maker of the first offer is left out of pocket to the tune of inspections, legal fees, and mortgage fees incurred to date.

Gazundering is where a buyer, having had one offer accepted, subsequently makes a lower offer. This may be genuine, in the light of faults identified on inspection, or may be based upon pure greed arising from the seller’s need to sell quickly.

Home Information Packs

In an attempt to partially address the inefficiencies of the English real estate system the previous U.K. government introduced Home Information Packs (HIPs) from August 2007 for properties with 4 or more bedrooms and from September 2007 for those with 3 bedrooms. Potential sellers had to compile a set of documents providing certain information about the property.

HIPs included an energy performance certificate, sale statement, title documents and local authority searches. Certain other documents relating to the lease are also required for leasehold properties.

Requirement for the Home Information Pack for property sales was suspended with effect from 21 May 2010 by the coalition government. An exception is that the Energy Performance Certificate is still required. The government will shortly be changing the legislation to abolish the Home Information.

Costs of Ownership

As well as the costs of purchase it is also necessary to consider the ongoing costs of ownership in assessing the affordability / profitability of a property.

Every property in the U.K. is liable for Council Tax. Each property is allocated to a band (A-H) according to its value in 1991 (this is estimated for newer properties). The amount of council tax is set by each local authority for each band each year. Reductions are available for certain categories of people, eg a 25% discount for single householders, and benefits for those on low incomes.

Flat owners usually have to pay some kind of maintenance / management / service costs. These cover shared expenses eg buildings insurance, communal lighting, gardening etc. These should be identified before agreeing to buy.

Although freehold properties do not attract maintenance changes, the prudent owner will put a sum aside weekly or monthly to cover repairs and maintenance as necessary.

A mortgage lender will generally insist the building is adequately insured to protect their security. Depending on the loan and lender they may also insist upon life insurance, payment protection insurance etc. It is usually advisable to take out contents insurance alongside buildings insurance.

Be aware that builders and engineers in England don’t come cheap, and are of variable quality and efficiency. If you do decide on professional renovation be sure to get several detailed quotes for each task. Don’t necessarily take the cheapest, instead select the one that will do the best job for the money. Go for an established and experienced tradesman, preferably one that has been personally recommended. Don’t entertain unsolicited canvassers.

Unless you have an aptitude for DIY, or have had recommendations of competent, reputable, and AFFORDABLE professionals, fixer-uppers may be best avoided.

Conveyancing

Conveyancing is the legal process of transferring ownership from seller to buyer. It is conducted by a lawyer (solicitor) or licensed conveyancer.

Most High Street solicitors should be able to carry out this work, but quality of service can vary enormously. Get quotes from several, including details of what they will do fro their fee. As always, personal recommendation is a useful guide.

Many conveyancers work on a fixed fee plus costs of the various “searches” they undertake.

Searches will invariably include a local authority search, which will reveal if any building works are planned that might affect the property concerned. Other searches may be requested as necessary according to the type of property and location.

At some point in the conveyancing process you will receive a report from your lawyer, been completed by the seller, which details all fixtures and fittings that are being included in the purchase (and those which are not) as well as other important information about the property. This form will eventually form part of the contract of sale, so check it carefully.

It helps to choose a local conveyancer so you can call into their office frequently in the event things do not move as quickly as you would like. One disadvantage of the fixed fee system is that lawyers may be inclined to do the bare minimum (since they get paid no more for extras). Keep hassling them until completion is reached.

Once the inspection, searches etc have been completed satisfactorily a draft contract will be issued to buyer and seller formally stating details of the sale. Buyer and seller both sigh identical copies of the same document and return these to their respective lawyers. The lawyers then agree to “exchange contracts”. A deposit (usually 10%) is also payable. It is only at this stage that the completion date will be fixed! It is also only at exchange of contracts that buyer and seller pass the point of no return, or at least leave themselves liable to legal action should they attempt to back out of the deal.

Costs of Purchase

The costs of purchase include the following:

• Stamp Duty (tax):
  for properties up to £175,000, stamp duty = 0%;
  for properties over £175,000 and up to to £250,000, stamp duty = 1%;
  for properties over £250,000 to £500,000, stamp duty = 3%;
  for properties over £500,000; stamp duty = 4%.
  Bizarrely the rate quoted is payable on the ENTIRE purchase price, eg a house priced £251,000 is liable for £7,530 stamp duty, whereas one at £250,000 is liable only for £2,500. It follows that it is very well worth negotiating a reduction to take a property just below a stamp duty threshold.
• legal fees – generally consisting of lawyer’s fee plus those of any searches carried out
• land registry fees
• valuation/inspection fees
• mortgage “arrangement” fees (essentially points, an up-front payment in return for better rates)

The UK has no shortage of choice of mortgage deals, including a wide variety of investor mortgages (known as “buy to let”). A properly qualified and licensed independent mortgage broker should be able to guide you through the maze.

Before consulting a broker it helps to make some decisions regarding the kind of mortgage you require, eg fixed or variable rate, special features like early repayment or overpayment facility etc.

Choosing a Property

Choosing a property in England is much the same as choosing a property anywhere else. First decide on location, type of property and budget. Create a prioritized list of desirable features. It may also help to get a mortgage agreement in principle (ie the lender will state how much they are prepared to lend you) to show sellers you have the available finance.

Approach all suitable estate agents (realtors) with your requirements. Realtor fees are paid by the seller, so there’s no restriction how many you contact. Many (but not all) agents publish their listings at http://www.rightmove.co.uk/.

Consider also the growing number of “for sale by owner” Web sites used by sellers wishing to avoid agent’s fees. Sites include http://www.propertiesdirect.co.uk/ and http://www.first4sale.com/.

Traditionally, the majority of transactions have been handled by agents, but with the growth of the Internet the “for sale by owner” route is set to become increasingly common.

Buying at Auction

Buying at auction can be a means of achieving a quick purchase, and also getting a bargain to boot.

A successful bid at auction constitutes a contract to purchase with no going back by either side, so it is essential to carry out any inspections / legal searches etc ahead of the auction itself. This means of course that unsuccessful bidders will probably have spent significant time and money for no purpose.

Take time to peruse the list of properties coming up for auction, these are published by auctioneers and estate agents or see the Web sites listed below. Make arrangements to view those that seem most likely, then proceed to get an inspection and legal checks done on those you want to bid for.

Tip: visit a few auctions beforehand for a dry run before bidding for a property just to see how things work.

It’s possible that the seller may just want a quick sale, but beware that it’s most often problem properties that end up at auction. These may include re-possessions that have been trashed by evicted former owners, properties in very poor states of repair etc. Be sure to do your homework, and if you intend to bid on a property set a maximum figure to which you will go – and stick to it!

See http://www.propertyauctions.com/ and http://www.auctionpropertyforsale.co.uk/.

Take your time to get a feel for the market, particularly if you are unfamiliar with the locality. View several properties, comparing the price and what’s on offer for each. Most importantly check the prices that properties have actually recently sold for. This is a much more accurate indication of market value than the seller’s asking price. See http://www.nethouseprices.com/.

The Purchase Process

The purchase process begins with the making of an offer to the seller. In England offers are often made orally via the estate agent and often don’t include the number of “subject to” statements common in North America, and significantly don’t usually include completion and possession dates!

There may well be some negotiation and counter offers before agreement is reached. In any case all offers to buy should be made “subject to inspection (survey) and contract”.

Inspection

Once an offer is accepted you will probably wish to arrange for a property inspection (survey). Different levels of inspection are available. If you are buying on a mortgage the lender will almost certainly require a valuation to be carried out to protect their capital in the event of default.

The lender’s inspector (surveyor) may also offer to carry out more detailed inspections (at extra cost) or you may wish to shop around or employ an inspector on personal recommendation. Be sure to check their qualifications and professional body memberships.

A valuation merely consists of the inspector’s opinion of the market value of the property. No details are included. A “Home Buyer’s Report” is the next level of inspection. The inspector will make a more detailed inspection of the property and provide a report of around 20 pages highlighting potential problems. The home buyer’s is usually based on a visual inspection coupled with the inspector’s experience and does not carry any guarantee in the event of problems that were not identified.

The most comprehensive inspection is the full structural survey. This does include certain tests and it is possible to sue the inspector in the case of problems found later that should have been identified but were not.

There may also be a need to obtain specialized inspections, eg for electrical or plumbing installations. This need may be highlighted in the general inspection, from information communicated by the seller, or your own observations.

In the light of the inspection(s) results you may decide to go ahead, walk away, or re-negotiate price taking account of necessary repairs.

Buying property in England is not for the faint-hearted. The real estate laws, which seem to come from another era, permit both buyer and seller to re-negotiate or even walk away from deals even after offers have been made and accepted, virtually right up to the last minute.

Why Bother?

Given the warning above one might well ask why bother? Well, if you need to live in England you don’t have much choice.

But there might be another reason. According to government Land Registry figures, real estate prices more than doubled in the 6 years to Oct 2006), and despite the credit cunch, house prices fell less than predicted and already appear to be rising once more.

This is because demand for housing continues to outstrip supply. The U.K. continues to be a high immigration country and more families are getting divorced (creating more households).

Additionally, as affordability becomes harder for first-time buyers coupled with insufficient affordable public-sector rental accommodation, demand is increasing for privately rented housing.

Types of Property

The types of property available in England are not dissimilar to those in North America, though the naming differs. Here’s a brief guide to the most common types:

• Detached – the house occupies an entire building.
• Semi-detached (duplex) – a single building consisting of two houses.
• Terraced (town house) – a number of houses in a row.
• Bungalow – a single-story house.
• Flat – apartment. The term apartment is also being used increasingly in England. Flats may be of two kinds:
  • Purpose-built flats were built to be used as flats.
  • Conversions – These exist within large houses that have been converted from single units to a number of flats.

Types of Tenure

• Freehold – Mainly relates to houses. The owner owns both the structure and the land it occupies.
• Leasehold – Mainly relates to flats. The owner “owns” the structure, but the land is owned by someone else, the “landlord”. Leasehold property is leased for a fixed period, often 99 years. At the end of the lease the property reverts to the landlord. Beware of buying leasehold property with less than 50years remaining on the lease. Often a charge for “ground rent” is payable.
• Commonhold – A relatively new form of ownership in which owners of individual flats share the freehold of the entire building (and land). Commonhold properties may employ a professional management company, or may be self-managed by the individual owners. Self-managed properties usually have cheaper management fees, but owners may be expected to “volunteer” for gardening, painting etc, and this can cause friction between owners depending on the proportion of work they feel they undertake.

For most people their mortgage is the biggest financial commitment they undertake in their entire lives, both in terms of the sum involved and the period over which it is repaid.

The good news is that the mortgage market is highly competitive with numerous lenders vying to finance your home with all kinds of mortgage deals.

Types of Mortgage

The highly competitive mortgage lending market has led to a huge range of choices for consumers. While this is a good thing in keeping costs low the sheer volume of options available can be bewildering.

Repayment v Interest Only Mortgage

With a repayment mortgage each payment made covers interest plus capital repayment. In the early days the bulk of each payment goes towards interest. As the term progresses so the proportion of capital repaid increases.

With an interest only mortgage (investment backed mortgage) the entire sum is borrowed for the entire term. Mortgage payments consist solely of interest on the debt. The intention is that in addition to the mortgage payments the mortgagor also funds an investment(s) with a view to accumulating sufficient capital to repay the mortgage at the end of its term.

For most people a repayment mortgage is probably the best choice. The total interest paid is lower, and it is guaranteed that, provided payments are kept up to date, the mortgage will be repaid at term end.

More interest will be paid with an investment backed or interest only mortgage, and it carries the risk that the investment(s) will not have grown sufficiently to repay the debt at term end. There is, of course, the chance that the investment value will exceed the mortgage debt thus providing a cash bonus, but there is no guarantee of this. Interest only mortgages may be suitable for those who expect their earnings to increase in future, and given the historically high cost of housing may be the only means of securing accommodation for an increasing number.

But beware! There is currently a major scandal in the U.K. over the mis-selling of endowment mortgages, which has left many short of the funds needed to repay their mortgages.

This author believes in a “horses for courses” approach to money management with mortgage repayments, savings, investments, insurance etc each being handled separately so that each may receive the optimal approach appropriate to its purpose. Shelter is such a basic need that it should not be placed unnecessarily at risk thus a repayment mortgage is favored in most cases.

Fixed Mortgage v Adjustable Rate Mortgage (Variable Rate Mortgage)

This is essentially a gamble, requiring you to look into the future. Do you think interest rates will rise or fall? Over what period? The lenders have already made their guesses as reflected by the deals on offer, but interest rate movements are truly unpredictable. The further into the future you look, the more unpredictable they become. For cautious people fixed rates do offer the advantage of certainty, but you may suffer the frustration of being fixed into a higher rate when generally interest is falling. Reading the financial press may provide some insight, but frankly, given the term of most mortgages runs into decades, the best advice is to listen to your heart and follow your gut feeling.

A variant of the fixed v adjustable dichotomy is the capped mortgage. These fix a maximum rate for their duration, but allow you to benefit from any rate falls. A cap and collar mortgage keeps rates within a band – not exceeding the cap but not falling below the collar.

Trackers are linked to some external index, eg central bank rate, thus provide protection from arbitrary decisions by the lender

A flexible/offset mortgage links the mortgage with cheque and savings accounts and credit card. Savings used to reduce outstanding debt, whereas credit card borrowing takes place at the substantially lower mortgage rate. The mortgage interest rate can be higher than more “traditional” mortgages.

Points (sometimes called arrangement fees) provide a lower interest rate in return for payment of an upfront fee. To ascertain whether the payment of points is beneficial you need to consider how much the lower rate will save compared to the upfront charge. This depends on:

• How much you are borrowing (the more you borrow, the more likely points are to be beneficial) .
• How long the discounted rate applies for.
• What happens upon expiration of the discount rate, what fees apply in order to move the mortgage following expiration of the discount rate.

Home ownership should be everyone’s top financial priority. Renting for anything more than a short-term stopgap is throwing money away. Why pay someone else’s mortgage when you could be paying your own?

For many, owning their own home will be the limit of their real estate portfolio. As probably their largest asset, that’s fine. But property can provide excellent opportunities for further investment.

Although residential real estate has much to offer (everyone needs somewhere to live!) there are numerous alternative real estate opportunitis, eg commercial (malls. offices, factories, warehouses…), mobile homeparks, even billboards can be surprisingly lucrative.

Real Estate Investment Trusts (REITS)

The simplest way to get involved is through an indirect investment in a Real Estate Investment Trust (REIT). REITs are traded companies that own and lease residential and commercial property. They are well established in North America but relatively new to the UK following recent changes to the law. Investors buy stock in REITs and benefit from a rising stock price and regular dividends.

REITs provide a means of diversifying the risk of direct real estate investment by spreading your capital across multiple properties. They offer exposure to real estate market returns without the need to find tenants, fix bathrooms or bear the risk of unoccupied periods. REITs also provide an excellent vehicle for those saving for a deposit on their first home, since their money will keep pace with rising real estate prices.

Real Estate Investment Strategy

There are two ways to profit from direct real estate investment, ie owning actual houses and apartments:

The first method is flipping. This means buying cheap, probably making some improvements, and selling at a profit. Although it’s possible to find below market price properties that can be quickly sold for a higher price, it isn’t easy as your potential buyer is also searching for the same thing. More often you will have to do some renovation in order to sell on an improved product.

This route is best suited for those with an aptitude for design and a talent and passion for DIY. If you have to rely on tradesmen to carry out the work their fees will quickly eat up any profit potential.

If you MUST use tradesmen be sure to choose only those with a well-established track record, get references (the more the better), get several quotations to make sure you’re not paying over the odds. Personal recommendation is also worth a lot.

The second method is by buying one or more properties to rent out. Returns come from two sources – rental income and capital appreciation. This is a long-term strategy, but can be extremely lucrative over the years. In this case buying below market price is less important (though great if you can) than rental market knowledge. What areas attract most renters? What kind of properties are they looking for? What are the rental yields (ie the annual rent divided by the property value)?

If you’re looking to make money by renting, avoid buying anything that needs a lot of work, because time spent up a ladder is time without rental income.

If you rent property out you are responsible for carrying out any necessary maintenance / repairs. Being able to do as much as possible yourself will save money. (Consider a DIY course at your local college). For those things you can’t do it’s good to have the names of suitable repairpersons to hand. The advice given above on choosing tradesmen applies equally here. Taking out maintenance insurance for plumbing, heating etc can help balance the budget by replacing unexpected big bills with a regular monthly outlay. Such insurance may be avilable as an add-on to your building insurance, but as always – shop around!

Financing Real Estate Investment

Real estate investment is generally financed with borrowed money, ie mortgages. This means

• it isn’t necessary to own the entire capital necessary to purchase your next property – only a relatively small percentage, and
• you get to benefit from leverage – a magnification of any gains (or losses) due to using borrowed money. Eg, you buy a $200,000 house but put down only $20,000. The price rises to $220,000 – a modest increase of 10% – but your interest, or equity, has doubled from $20,000 to $40,000. Your debt remains at $180,000.

Although any investment can be financed with debt lenders are particularly happy to advance funds on loans secured with property, safe in the knowledge the asset becomes theirs in the event of default. As your share of your existing property/ies increases, so you can use the equity to obtain further mortgages. This is how it’s possible for relatively small investors to build a portfolio of properties.

Like all markets property / real estate prices can fall as well as rise. But unlike other investment types property / real estate is REAL. Whatever happens to the market you still have that same physical asset (stocks can go bust, cash can be eaten by inflation… but a house is always a house).

The sub-prime mortgage crisis in the US has seen some housing prices fall. UK housing prices have more than trebled in the decade to 2007, but is this sustainable? Trying to predict the future direction of the housing market has become a national pastime, but the only predictable thing is the unpredictability of short-term movements. However, in the long term real estate prices have risen steadily and there is no reason to believe they will not continue to do so.

Sellers
To say this isn’t the best time to sell is an understatement. Unless you really need to move it’s best to wait awhile until markets return to more normal conditions. The world has limited land but a growing population. Over time real estate has consistently proven to be one of best investments and will surely continue to be so.

If you have no choice in selling, eg due to a need to relocate, bear in mind prices are most likely to keep falling for a while, so the quicker you can sell the better. Set your price realistically, and make sure you show your home to its best.

If you have the financial stability now could be a good time to upgrade, as the price of your next property will also be off its high. Assuming you’re moving to a more expensive property and it has fallen by the same percentage as your home you’d be getting a good deal as in cash terms the new home will have fallen more than the old.

One option is to rent out your old home until its value rises again. This can swing two ways. First there’s the risk of holding two mortgages, which could be untenable unless you can find tenants. And there might be a glut of rental accommodation as others who want to sell decide to rent until prices recover, this would reduce market rents and raise the likelihood of vacancies. On the other hand some buyers might choose to rent while waiting for the market to bottom out. In this scenario the vacancy period will be delayed until prices are at their lowest.

Buyers
Buyers face a double difficulty – fewer properties on the market and the prospect of buying something that is likely to decrease in price in the short term. On the other hand every offer, however aggressive, will receive serious consideration. Don’t be afraid to test the motivation of the seller, you might just find a bargain.

Do your research before writing offers. Get hold of actual sold prices of similar properties in the area, either from your realtor or off the Web. Find out too how much prices in the area have fallen, and reduce the sold prices accordingly to give a starting figure.

Investors
Given the long-term merits of real estate, now is the time to go shopping. There may not be as much inventory as usual, but what’s there will be open to some pretty creative offers. If you don’t try, you don’t get.

In particular look out for foreclosures being re-sold, or those in danger of foreclosure who may be looking for a sale to keep their credit records in tact. Often they’ll be only too happy to stay on and pay rent.

Mortgages
The current financial crisis was caused by banks lending money to those without a hope of repaying. The banks got their fingers burned and the result is it’s now a lot harder for everyone to borrow money. The days of “zero down” are (temporarily?) over.

The range of mortgage choices available has been severely reduced, which means it’s all the more important to choose the right deal. If you’re looking for a mortgage research widely, check out Web comparison sites, and/or visit an INDEPENDENT mortgage broker with access to the whole range of deals. The same applies to those on fixed term deals nearing their end.

Negative Equity
Negative equity is the situation where the amount you owe on a piece of property exceeds the value of that property. In such circumstances the temptation may be to walk away and allow the lender to foreclose. However, this is not a good long-term solution since it will hit your credit record hard and make it harder and/or more expensive to borrow money in the future. Just keep in mind real estate is a long-term commitment and over the years the negative equity will be no more than a blip on the journey upwards.

Avoiding Foreclosure
If you’re having trouble maintaining mortgage payments, the most important thing is to admit you have a problem. Talk to your lender as soon as possible. Lenders HATE to foreclose, they’re not in the business of selling real estate, so they’ll be more than willing to try and work out a deal to keep you in your home.

Another alternative is to find a buyer who will let you stay on and rent back your home. This can work well, but be aware the buyer will be looking to pay below market value, and the rental costs may be excessive.

If you own a home you will inevitably receive unsolicited visitors offering all manner of services to improve your property, eg roof repairs, wall coatings, drive resurfacing etc etc. Should you express any interest in what’s being described you will receive a visit from a sales person who will explain, at length, the many merits of their particular offering. Often the sales person will act as a pseudo-professional, making a cursory inspection and informing you of the many bad faults afflicting the home you’ve long and happily inhabited.

The visit will conclude with a very special offer, available for today only. One of the favorite tricks is to say your home will be a “display” property and thus eligible for a large “discount”. If you can’t afford to pay cash (or even if you can!) you’ll be offered financing at some stratosperic interest rate.

Of course these visits are aimed at only one thing, relieving you of as much of your hard-earned money as they can get away with. Often the salesperson will drone on and on until you’re semi-hypontized and ready to agree to almost anything just to be rid of them.

personalmoneymanagement101′s advice is to say no to all unsolicited callers. If you do deal with a door-knocker, never agree to anything on the day. If you are tempted by a “now or never” offer make certain there is a “cooling off” period in which you can change your mind. But at risk of repeating myself the best advice is just say no. If it ain’t broke, don’t fix it.

If you do have a problem, a need or a desire (as we all do sometimes) that you’re unable or unwilling to tackle yourself, seek out reputable operators that can assess your needs and give you detailed quotations. A minimum of three quotations should be the norm.

The best way to find tradespeople is through personal recommendation. Alternatively look for established operators with a trading history, those that come recommended by local consumer groups, and those that are members of recognized associations.