As Property Prices Fall Protect yourself Heres How

by : Kelly Price

The economy is in trouble and so to is the housing market as foreclosures continue to rise as values tumble. If you are worried about any real estate you own declining in value, there is now a solution and it comes at an affordable cost.

If you are worried about further falls in the value of your home, investment property or commercial property holdings then there is an affordable solution to give you peace of mind but first look at the state of the real estate market and why further price declines are likely.

The Worst Decline for 50 Years

US pending home sales fell by 2.6% to 87.6 month on month recently.

Boston Fed President Rosengren has stated that the current decline in investment decline is the longest in 50-years.

He focused on the fact that previous housing declines have led to recessions and the Fed recently took action by cutting interest rates by 75bps, showing the gravity of the situation.

The problems in the economy are reflected in a housing market that is falling and prices look set to fall further.

Foreclosures on Rise

The number of foreclosures is on the increase

500,000 mortgages in the USA were foreclosed in the third quarter of 2007.

This was a 100% increase on the previous year.

Many are forecasting that around to 2 million homes could be foreclosed for the period 2007/2008.

Protection from Falls

Some companies are now offering to protect against further losses should the market fall further. The service works in the following way:

The company offers an option contract which provides a specific value for your property at the time the agreement to lock in the value is entered into.

This option comes into affect after two years (allowing the homeowner to sell at the guaranteed lock in price should they wish to do so) this then gives homeowners protection for up to 10 years against falling values.

Homeowners will therefore be able to sell your property at the agreed price.

It doesn't matter if there is a buyer for the property, as the company who has signed the agreement to lock in the value is obliged to buy it back at the price agreed upon.

For a small fee, any property owner can be guaranteed a minimum price for their property and are protected from further real estate price falls.

If Prices Rise What Happens?

You keep all the gains!

Keep in mind - you are not obliged to sell to the company who locked in the value - you only sell to the company if you want to. So in conclusion, you have a locked in minimum value if prices fall and if prices rise - you keep all the capital gains.

A Service For All Property Owners

The above options are a great tool to help deal with volatility in the property market
And can be used to protect:


-Second homes

-Investment property

-Commercial property

So if you are worried about the outlook for real estate values in these volatile times, then these options are an affordable tool that can give you peace of mind.