At first glance there is little to link the Bank of England with foreclosures in the United States.  After all American real estate (and the state it is in) should have little enough to do with one of the world’s oldest banks across the big pond.

And yet, the truth is that the ‘first glance’ is deceptive. Foreclosures are a fact that depends on a simple premise: credit, or rather the lack of it. The latest Bank of England report on the financial crisis we are facing gives a stern warning concerning the potential shrinking of credit, the overexposure of UK investment institutions in the US real estate sub-prime mortgage market and the very distinct possibility that we are heading for a severe credit crunch.

Until recently the Bank of England had held silent on the matter so the warning it has now issued is not to be taken lightly. Essentially the report highlights the fact that the overexposure of UK financial institutions in the US market may lead to a drop in profits as they take a hit, which will lead to a toughening up of available credit for commercial organizations as well as private clients which will lead to a shrinking of the economy in terms of a reduction in growth which may suddenly start a recession.

This is bad news indeed. In terms of real estate this is what will happen: There will be an increase in foreclosures as more and more mortgage holders find they can no longer make payments due to the fact that they have lost their jobs or can no longer access the kind of credit they need to keep afloat due to tougher lending practices. Lenders will move to recoup their costs faster, which means that rather than risking house prices dropping and their exposure in terms of properties they have foreclosed on, increasing they will move to foreclose early and sell as soon as possible.

This is indeed what is happening already in some parts of the country where lenders feel they have been overexposed and are now looking to minimize the risk. In other parts however, as well as in the United Kingdom, this has not happened which might mean that it is still possible it will not happen at all and all we will experience is a gentle correction of real estate prices across the world, rather than a bubble bursting and prices collapsing.

The Bank of England warning, at the moment, is just that, a warning. But not heeding it and preparing for the worst while hoping for the best can be foolhardy.

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Selling a house can prove a daunting task unless you are familiar with the things that need to be done before letting people know your house is for sale. There is no magic formula to sell the house and you need to do careful planning and meticulously spruce up your home.

Despite best efforts, some houses do not sell and there must be certain valid reasons for this. Of course real estate agents will tell you that there is buyer for every home. The one most likely reason is your expectations are unreasonable and the house is overpriced. All prospective house buyers know the market value of a house and will simply turn away if you quote anything exorbitant. So, the right thing to do is to lower the price after studying the market conditions and knowing what prices houses in the neighborhood are fetching.

Most real estate agents, real estate investors and prospective buyers will see your listing within 30 days and the first thing they notice is the expected price. Even if the indicated price is marginally more, they will lose interest and will not pursue further. Some real agents also play tricks that delay the sale. Sometimes, they are the ones who ask you to inflate the sale price. They generally use the over-priced properties to sell their own listed properties.

Another reason for delay in selling your house may be because the house was ill-maintained. Remove all personal photographs from the walls and all personal collections from the showcases. Prospective buyers are not interested to see your possessions but imagine their own photos on the walls and their own belongings all over the house. People have a habit of collecting huge piles of junk which is an eyesore to any visitor. Get rid of all the junk or donate them if they are still useful. Make sure the kitchen and toilets are particularly neat and .clean. All prospective buyers have a tendency to open and view kitchen and bathrooms. If a buyer finds everything organized, he will believe you would have taken good care of the house all along. Carry out all minor repairs lest the buyer lest these things distract a buyer into changing his decision. Remove all unwanted furniture that blocks free passage when the buyer comes to inspect the house. Mow the lawn and keep the sidewalks clean as the first impression a buyer gets is the best impression.

The location and neighborhood of you house are of paramount importance. The buyer will obviously expect schools, shopping, hospital, and other similar facilities near the house. If your house is not in a proper locality, you can not be blamed.

All you can do is to extend some concession in price or offer seller financing or a lease option with rent credit.

Another key factor is engaging the right kind of real estate agent. The wrong type of agent will encourage you to overprice your home, fail to screen for potential buyers, not responding to interest from other agents. If your agent is apathetic, other agents may not share their prospective buyers list.

Computers and the Internet have dramatically changed the real estate marketing scenario. According to the National Association of Realtors, more than one-third of all home buyers use the Internet for deciding their purchase. Your agent will have to do your listing in color to show to clients and communicate with clients through emails.

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The Lone Star State was the scene of the original land rush back in the 1800s and now, more than two hundred years later it is no different. Beachfront properties, ranches and lakeside homes are being snapped up in the great State of Texas where house prices have kept a steady if somewhat slowed growth and foreclosures have risen but nowhere anything like the rest of the continental USA.

So what’s up? Why is Texas so different?

Well, for starters it is big and it is popular and it has everything. It has lakeside properties, beachfront, mountains and plains, rivers and creeks. It seems you name your ideal kind of property and Texas has it.

Because of this variety Texas is a litmus test for the health of real estate in the rest of the country. Variety and the quality of properties on offer have meant that Texas home prices rose in a more steady, sustainable manner than in the rest of the country. At the same time supply has kept pace with demand and the number of foreclosures experienced across the Lone Star State have been relatively low given the number of home sales.

It is precisely because of this even mix that Texas has highlighted that we can see that the state of the real estate market across the country will soon be in a phase of recovery which will need to a natural upswing.

This means that the foreclosures we are seeing are part of the natural correcting mechanism that is built into the real estate market and is intended to release the necessary, frozen capital needed to revitalise the market and allow first time buyers to get their foot on the property ladder.

With foreclosures beginning to release a fresh batch of reasonably priced homes lenders are beginning to loan money to new owners, at better terms, thereby injecting a new momentum in the real estate market which will start to pick up steam again and expand as rapidly as it had before the current credit crunch with the sub-prime mortgage sector began to bite.

It is highly likely that the picture of gloom we are seeing at the moment is part of the natural inertia of the system which is slow to show recovery and better home sale figures. It is definite however that, as the foreclosed properties are released, sold and bought, a fresh batch of home owners will inject much needed cash into the market and there will start again the steady rise in the confidence of buyers and investors in real estate and the inevitable creep of house prices, elements of which we already see in many areas of Texas. 

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