We all know that the real estate market has taken a hit during the recession. Many assumptions are made that looking at real estate is not necessarily a great indicator of wealth. We need to closely examine a few details. First of all, when was the home purchased? If you prospect purchased their home over 10 years ago then is their property value really “under water”? I would bet in most cases that they are not upside down. Granted the capital gains from the sale of the property may not yield what it did a few years ago but probably not at a loss. Also, if they have owned their home for 10 or more years their equity could be at a very nice level. Lakeside property has not lost its value and in fact, I can personally tell you it has continued to increase over the last few years.
For your prospects that have made recent home purchases there is something to consider. Banks are no longer offering individuals to purchase homes outside of their income/comfort level. So if your prospect has recently purchased a $1M home or vacation property, then they have the income/assets to meet that responsibility. They also bought property at a bargain price and the likelihood it will continue to increase in value is high. Start building your relationship with these individuals because the potential for significant capital gains in the future is eminent.