Investor Deals Where are they in a RECESSION?

What is a buyers market?  What is a sellers market?  Weve all heard the terms, but have really given good thought to what they mean and more importantly what they mean to you?  Lets look at each:

BUYERS MARKET:  This means there are more SELLERS in the market than there are BUYERS.  When SELLERS are in greater number then you get excessive inventory.  The inventory is made up of several types of sellers; 1) Those who want to sell but dont have to, 2) Those that really need to sell to make things easier on them, and 3) Those that absolutely have to sell!  All you need are a couple people in the third group to drop their prices and then the area the house is in gets tainted.  The Realtors of the buyers now going to that area will pull what has sold and will tell the buyer about the house.  That gives them leverage to ask for a lower price on your house.  Depending on what group you are in when you are selling will determine how you respond.  The bottom line on a SELLERS MARKET is that inventory exceeds buyers.  This means you should not sell your home for the heck of it when your area is in a buyers market.  What this means for investors is the worse a buyers market gets, THE MORE YOU SHOULD BE LOOKING TO BUY!

SELLERS MARKET: Obviously this is the opposite of the above, so what it means is that there are more potential BUYERS than there are homes to buy.  This is called a SELLERS MARKET because typically sellers can set a price and if the buyer wants to live in that house they need to pay that price or there is a good chance someone else will and they will be left without a house!  What this means for you is that you would ideally love to sell your home in this type of market!  This is the market where your neighbors house sold for $500k while being on the market for 3 days, and yours is very similar so you would ask $550K.  If your home sells for that in short time there is a good chance your other neighbor may put his up for $575k, and so on until the price gets so high that buyers will not pay it.

So where are investor deals in a recession?  Well thing to remember is there are always deals out there.  You just have to know HOW to find them and WHERE to find them.  If we are in fact in a recession it is more likely that you will find investor deals largely from the slow down in the housing market rather than other factors that lead to a recessions (the receding of growth in the economy for 2 consecutive quarters).  So the deals are where they have always been, with people who CANNOT sell their homes and ARE willing to give up their equity if you will make their problem go away.  Those people were there in 2005 and are still here today.

Essentially I dont think the recession (if we are in one) means you will find deals.  That would be more likely if our unemployment rate was really high, but it is not.  If we are in a recession that was brought on by the beat up housing market then you could say there are more deals out there because of the recession, but I really think there are potentially more deals out there because we are in a buyers market.  Just because we are in a buyers market does not necessarily mean the we are in a recession, and conversely just because we are in a recessions does not neccessarily mean we are in a buyers market.

The bottom line is that whenever we are in a buyers market the investor should be trying to buy houses that are good deals.  Typically so-called investors want to buy when we are in a sellers market thinking that this time it cant possible end.  True investors take advantage of a time when nobody will buy to get the best deals and sell when everyone thinks it is the best time to buy.  Sounds like a buy low sell high strategy.  Something most of us have heard for years, but have not been educated enough to put into action.  So go educate yourself!