Financial Trouble in Real Estate?

Some Sequim real estate and Port Angeles real estate owners are looking at serious financial trouble on the horizon. Many property owners refinanced not once but several times in the past five years as the mortgage industry reduced rates and standards. Lower rates created the motivation to not only lower the monthly payment on a long term mortgage, but to keep pulling out cash.

While all that sounds like a free lunch, we all know there’s no such thing as a free lunch. Refinancing to lower the monthly payment is great, provided the term of the amortization is not increased, and provided money is not taken out that could go toward reducing the mortgage balance.

Alas, some local businessmen and homeowners are now concerned about their debt service, and this really hits home if the current state of the economy has reduced income. It has for some businesses. In any slowdown, cash is king.

This will present a rare opportunity for real estate investors with cash, and it will also give home buyers with cash or good credit a rare opportunity to buy homes from those who are in trouble. This spring will see new buyers coming from California, Arizona, and the Seattle area shopping for good deals. One aspect of buying and selling will become more important than any other: negotiating experience in this kind of market. The difference could be $10,000 to $50,000. That’s not pocket change.