According to Redfin’s July 2014 Housing Tracker report more and more sellers will drop their prices this fall to attract buyers. Redfin agent Adam Welling tells Redfin. “When a buyer sees a price drop, she takes it as ‘blood in the water’ and wonders what’s wrong with the house (or the market) and wants to negotiate for an even lower price.” “Sellers are finally catching on that it’s not a seller’s market anymore,” says Redfin agent Jeremy Cunningham. “We also expect prices to continue to flatten, and to potentially decline month over month in September or October. If that happens, it will be the first three-month price decline since the fall of 2012.” says Redfin. The shift has been in motion since November of 2013. Home prices have been gradually selling for less and less over the asking price. The number of homes that sold above list price in July is down nearly 7 percentage points from a year ago, the biggest drop of the year.
If we are at the beginning of another drop in housing prices, it is the perfect time to advise your clients to protect their equity through a Reverse Mortgage. There are many good options with this FHA insured program. You can pull the money out and invest it, you can get a RM and leave the money in a Line of Credit: which grows and can never be frozen or taken away like a traditional Line of Credit at the bank. Or one can eliminate the mortgage payment and get a Guaranteed monthly payout for life no matter what happens to the housing market. Another option is to pull equity out now at the peak, and wait for prices to drop and purchase an income property with this money. If we are at the top of the housing market, one thing is for sure, as home values drop Reverse Mortgage payouts drop significantly. For those that have been considering a Reverse Mortgage this may be the last chance many will have to do it before home values fall enough to disqualify them.
As financial professionals it is our responsibility to spot and anticipate market trends to protect and help our clients benefit from these trends. In 2007 before the market dropped I was able to help several clients obtain a Reverse Mortgage at the peak of the housing market. Through a Reverse Mortgage they pulled much of their equity out of their homes, and protected it before the housing drop. One of these clients eliminated her mortgage payment, and received a Guaranteed monthly check for life of almost $2,000.00. After she closed her RM, the housing prices began to plummet and she was soon upside down on her mortgage! But it did not affect her. Nothing changed for her. She still did not have a mortgage payment, she still did lived in the home, and she also still received her $2,000.00 per month checks. The Mortgage Insurance on the Reverse Mortgage protected her from the volatility of the housing market. Now that home values are back up, she has equity once again, and she is still getting her monthly checks. Take a look at our Reverse Mortgage calculator, it takes about 30 seconds to run a scenario to see how much equity your clients, family and friends could protect with a Reverse Mortgage. Click Here.