Inman News has some information that might be important if you are house flipping. Inman News reports this month that foreclosures have hit new levels. According to the chief economist for the Mortgage Bankers Association, foreclosures were at record rates during the fourth quarter and experts predict the rates will get worse before they get better. The problem is that while short-term interest rates have fallen, many people are having equity leached out of their properties through falling home prices. As a result, owners are not very motivated to keep up with loan payments, especially in recent boom markets such as California, Florida, Nevada and Arizona.

Between the fourth quarter of 2006 and the fourth quarter of 2007, foreclosure rates more than tripled in Florida and more than doubled in California. The total percent of loans in foreclosure increased from 1.19 % to 2.04 % in the same period. Experts predict that as long as house prices continue to stay low, foreclosures will continue to increase in number.

If you are house flipping, the Inman News update has a number of implications:

1) There are lots of foreclosures on the market and many more coming on the market every day. Bargain-conscious buyers can pick and choose from these distressed properties. If you want to sell a beautifully restored home you either need to target those who can afford to pay more – and this number is dwindling – or offer something that people really want.

2) There is little demand. Lots of development in areas such as California, Florida, Nevada and Arizona mean that a home has to be pretty special – not to mention priced right – to attract buyers. In other areas – such as the Mid-West – there hasn’t been much overdevelopment, but emigration and job problems also are keeping people from buying.

3) Buyers are in trouble. If a buyer has little to no equity in their current property, buying a new home is a bit of a stretch. You need to understand the pain buyers may be feeling and look for ways to provide properties in a way that won’t ruin buyer’s hopes. Cater to your customer – the buyer – and you will still succeed.

4) Marketing just got more important. There are so many homes on the market – how will buyers find yours? Plus, in a buyer’s market, your ads and marketing strategy has to make sense. Current popular real estate shows are one good way to showcase your properties. Social media sites are another great way to market and network.

5) There is no need to despair. OK, Inman News did not point this out, but you don’t see Donald Trump running. Savvy real estate professionals will continue to make a good profit. Current lower rates coupled with lots of property and foreclosures can mean that this is a good time to buy. If you have an established business and can afford to rent out properties for a while, you can still make a very tidy profit when the economy spins around again. Even the most pessimistic forecaster isn’t writing an obituary for the real estate market – all the professionals hope that the market will turn around. In fact, Inman News is predicting that the foreclosures may peak as early as late 2008. Buy low now and you can sell higher then. Keep in mind, too, that even if you are just starting out in this economy, other investors will be looking to buy low now. If you can offer an attractive price while still making a profit, you can simply switch your marketing focus to investors looking for longer-term investments. It’s not just residential buyers who can make your fortune.

6) Less buying can mean more rentals. If house flipping seems scary in the current market, there are still other ways to make money in real estate. From lending to renting, everyone is still looking for solutions. Everyone needs somewhere to live, and if they cannot afford to buy from you they may be interested in renting from you or borrowing from you. In a tough economy, some people may be selling under duress and looking for a place to rent – or they may be looking for new financing. Stay a little flexible and you can still be moving forward in your business.