April 18, 2024

Illuzzi Letter

Envisioning And Creating Your Dream Home

Changing Property Values

Change is the only constant in the universe. And this one relative fact is true in the real estate business. With the rise of inflation and the fluctuating interest rates, it is not difficult to understand the drastic effects it can have on us.

And in some markets it is worse than others. It has even happened where the values have just gone up just exorbitantly and then somewhat plateau out some, and then come back down. And with the recent changes in the interest rates, it appears that these circumstances are becoming more common. If you get a deed for a house and get someone in it, a year from now, that house might not be worth what it is now. So how does one handle this type of situation?

First, the best thing you can do is to not worry about it. It is for these reasons why you don’t want your name on the loan for one thing. It is very likely that the value of these houses is not going to come down so much that it’s going to destroy the equity that’s in it. This is because the value initially went up fast. And even if the equity is affected, a worst case scenario would be you getting the seller back involved with it.

It is true in some areas values of homes have fallen by up to fifty percent. But this happened over twenty years ago and the property value rose back up only after a few years. And keep in mind that, in the meantime, people still needed and had a place to live. This is one need that never changes.

The truth is you just about can’t buy houses out there today that do not already have some equity in them as soon as you buy it. Because of this, there is not much chance that it’s going to drop down where you’re going to lose all of the equity that you just acquired. Because of the rapid inflation rate, the prices have steadily been going up. And if the owner has financed the house to a hundred percent of its value, you probably don’t want it anyway.

But suppose you do run into a situation where the value of the property does drop to below the equity or below what is owed. At that point, you first would probably see if you are able to sell it to someone who wants to buy it for cash. Then you could call the lender and explain the situation to them and tell them they’ve got a problem and you’re here to fix it for them if they are willing discount the loan.