Sellers may provide below market financing in an effort to lure potential buyers, induce a sale, or to maintain a façade of higher prices, especially in a condo or planned unit community in a down market.
Developers selling recently constructed property in a community have an extra incentive to maintain high market prices since they are concerned with the sale of multiple properties. They may arrange to pay points to a lender in order to lower the mortgage interest rate for the buyer or provide for certain upgrades or other benefits.
Individual home owners may provide purchase money mortgages, installment contracts, and wraparound loans and other non-market financing. There are times where an extremely credit worthy buyer (due to a wealth of highly liquid assets, stable income stream, and little debt) will receive a below market rate loan from a bank. Investigations need to be made to ascertain what adjustments can be made and supported by market evidence for below-market financing or you run the risk of overpaying for your home.
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
Monday, October 27, 2008
Tuesday, October 21, 2008
Statistical Analysis a Panacea?
Availability of market data often determines which techniques are employed in the valuation of property. In the absence of sufficient comparable properties, but with a wealth of market data available, analyst can use statistical analysis to test how certain factors affect market prices. Sometimes, analyst can distill certain market patterns to support valuation. When there are few comparables, statistical, graphic, and trend analysis can lend a helping hand.
On the flip side, there are times where there are multiple sufficiently comparable properties where more precise information can be gleaned through statistical analysis, such as in large condo communities or in a planned unit develop. Use of regression models, coefficient of variation, and mean derivation can quantify how several factors in housing prices influence one another in a given market area.
Care must be taken to ensure that mathematical precise formulas are used to reflect market preferences, differentiating between elements of causation and correlation. When analyzing vast areas of property where the use of appraisers becomes time and cost prohibitive, such as in tax assessments, computer models provide an efficient way to analyze value.
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
On the flip side, there are times where there are multiple sufficiently comparable properties where more precise information can be gleaned through statistical analysis, such as in large condo communities or in a planned unit develop. Use of regression models, coefficient of variation, and mean derivation can quantify how several factors in housing prices influence one another in a given market area.
Care must be taken to ensure that mathematical precise formulas are used to reflect market preferences, differentiating between elements of causation and correlation. When analyzing vast areas of property where the use of appraisers becomes time and cost prohibitive, such as in tax assessments, computer models provide an efficient way to analyze value.
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
Wednesday, October 15, 2008
12 Great Ways to Analyze Property
Quantitative
1. Paired data analysis (sales and resales of the same or similar property)
2. Grouped data analysis
3. Secondary data analysis
4. Statistical analysis
5. Graphic analysis
6. Trend analysis
7. Cost analysis (cost to cure, depreciated cost)
8. Direct comparisons
9. Capitalization of Income differences
Qualitative
10. relative comparison analysis
11. ranking analysis
12. personal interviews.
Remember, the type of analysis and the degree of confidence in the conclusions one can make depends on the quantity and quality of the data present. Sometimes, the academically rigorous forms of analysis will produce more precise results but do not improve the degree of accuracy. It would be wise to look at the data available and decide whether a simpler model would be more efficient, and then modify this model if greater precision is needed. Oftentimes, a clear indication of whether to pursue a purchase or not can be found quickly with simpler models.
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
1. Paired data analysis (sales and resales of the same or similar property)
2. Grouped data analysis
3. Secondary data analysis
4. Statistical analysis
5. Graphic analysis
6. Trend analysis
7. Cost analysis (cost to cure, depreciated cost)
8. Direct comparisons
9. Capitalization of Income differences
Qualitative
10. relative comparison analysis
11. ranking analysis
12. personal interviews.
Remember, the type of analysis and the degree of confidence in the conclusions one can make depends on the quantity and quality of the data present. Sometimes, the academically rigorous forms of analysis will produce more precise results but do not improve the degree of accuracy. It would be wise to look at the data available and decide whether a simpler model would be more efficient, and then modify this model if greater precision is needed. Oftentimes, a clear indication of whether to pursue a purchase or not can be found quickly with simpler models.
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
Monday, October 6, 2008
Financial Crisis
The news has been dominated by the current credit crises affecting global markets. Due to extensive media coverage, many Americans are now familiar with how Freddie and Fannie affect the secondary mortgage markets and what subprime and alt A loans are. The unchecked growth of the derivatives market, collateralized debt obligations, and credit default swaps has wrecked havoc on the financial systems.
President Bush recently signed a Financial Bailout Package in hopes to avert the upcoming economic disaster. The bill has been highly unpopular and politicized with accusations of helping Wall Street and not Main Street. People are rightly concerned with putting their hard earned tax money at risk to bail out institutions which have unwisely invested in toxic assets.
There are a myriad of factors that influence the economy. The housing and credit markets are just a few of the elements that interact and affect the global economy. Though people are afraid of the repercussions, I find it quite troubling that the media can easily present definitive views of various bailout plans and strategies to avert a recession/depression. No one knows, with any degree of confidence, what may or may not happen in the future.
The central issue at stake is trust. Do we trust the government, which has access to the most critical information available, to minimize the risk of a credit collapse? Do we trust the notion that the demise of Wall Street has ALREADY affected Main Street, and needs support?
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
President Bush recently signed a Financial Bailout Package in hopes to avert the upcoming economic disaster. The bill has been highly unpopular and politicized with accusations of helping Wall Street and not Main Street. People are rightly concerned with putting their hard earned tax money at risk to bail out institutions which have unwisely invested in toxic assets.
There are a myriad of factors that influence the economy. The housing and credit markets are just a few of the elements that interact and affect the global economy. Though people are afraid of the repercussions, I find it quite troubling that the media can easily present definitive views of various bailout plans and strategies to avert a recession/depression. No one knows, with any degree of confidence, what may or may not happen in the future.
The central issue at stake is trust. Do we trust the government, which has access to the most critical information available, to minimize the risk of a credit collapse? Do we trust the notion that the demise of Wall Street has ALREADY affected Main Street, and needs support?
Any questions or for FREE customized Market Reports, automatic email updates on properties that fit your criteria, or Realtor Referrals, please EMAIL ME or call me at 734-478-9270. -Anwell Tsai
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