How does the “Real Estate Spread” affect you in today’s market


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I am Tommy Cooper – President and broker of Cooper Realty, Associates.  I have been a real estate broker since 1976, and I established Cooper Realty in 1984, 26 years ago.This is the 4th recession I have been through, and let me categorically state that the previous 3 were amateur hour compared to our current recession, depression, or however you choose to describe it.

All the tried and true workings of real estate what we dealt with in the past, have been replaced by an all new set of scenarios.

Mortgages, appraisals, settlements, they all have new and more cumbersome regulations to deal with.  Add short sales, foreclosures, credit rating standards, and we have a whole new real estate world to address.

The good news, for buyers and sellers who have found the few realtors who have adapted, is there are tremendous opportunities to take advantage of.

To understand these opportunities, you must relate to what I refer to as “the spread theory”.  If your current property is worth 30% less than it was 3 yrs ago, (and it may very well be), who cares?  It makes no material difference if you are upgrading to a better and more expensive purchase.

“Is he crazy”? you may be asking yourself.  No, I am not, and here’s why:

Hypothetically, if your property was worth $400,000 3 years ago, and only $300,000 today, to upgrade to that just right property 3 years ago would have cost you $600,000.  Now, it can be purchased for $500,000.

The spread to live in your dream home 3 years ago would have cost you $200,000 ($400,000 to $600,000).  Today, the spread from the reduced value of $300,000 to your dream home cost of only $500,000 is still the same $200,000.  Everything is relative- the spread is still the spread.

Add to that, record low interest rates, and you have the perfect scenario-  the same spread as 3 years ago at the height of the market and a much lower monthly payment than would have been, because of  record low interest rates.

Digest my theory and think about it.  There has never been a better time to buy real estate.

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