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The Playbook

Real Estate Strategies

Judy Dutton

theplaybookmb.com

Finally! Mortgage rates have fallen to 11-month lows in anticipation of Fed rate cuts this week. And that’s not the only good news: Listing prices also fell for the first time since spring, declining by 0.9% year over year for the week ending September 6, according to Realtor.com.

This potent combo of falling mortgage rates and home prices could mean significant savings for aspiring homeowners, particularly in markets with more pronounced price drops. In Los Angeles, for instance, asking prices have plunged by 7.6%, the steepest drop among the top 50 US metros.

After this summer’s historically sluggish housing market, homebuyers and real estate investors alike are crashing open houses like it’s spring 2021.

“I’m absolutely going to capitalize on this dip and reduced rates,” says Ben Mizes of 

. “Last week, I made an offer on a duplex in St. Louis when the seller dropped $25k from their asking price after 40+ days on the MLS. I’m hoping to add three to four doors by the end of the year.”

“This feels like the beginning of the end of a roller coaster that’s kept investors hesitant for months,” agrees Robert Rahmanian, a real estate investor and cofounder of brokerage 

. “There’s a lot of capital sitting on the sidelines, just waiting for the right moment, and this rate drop is starting to unlock some of that.”

There’s just one potential problem for a housing market desperate for a jolt of activity: If rates and prices are expected to continue dropping, investors might hesitate to scoop up properties now.

“The Fed only cuts rates when the economy is cooling. If a recession hits, rents could drop and today’s bargains could sour,” warns Chad Cummings, CPA, of 

. “If rents fall or vacancies rise, today’s ‘bargain’ could bleed cash by spring.”

To guarantee a deal he won’t regret, Mizes says he rate-shops aggressively and homes in on tired listings (those 30–60 days old). “I’m winning where there’s blood, locking in income-generating units in B-class neighborhoods with consistent rental demand.”

Below is a list of US cities with the biggest price drops, and here’s how to predict 

Mortgage rates and home prices are falling

Here’s where the biggest bargains are hiding and how much you can save.

Mortgage rates are falling, and so are home prices

Richard Robbins and his wife, Lisa, knew their family of nine needed more space than their half-acre lot in suburban Utah County, UT. The problem? “Land prices where we lived were exorbitantly expensive,” Richard says.

So in 2019, the family set off for the tiny town of Christiana, TN, where they purchased 11.25 acres with a 4,300-square-foot home and a pool for $800,000. Robbins points out, “A similar property in Utah County would have cost several million.”

The Robbins family made the most of their acreage, adding a garden, fruit trees, and a livestock barn for goats, sheep, chickens, and rabbits. When not working remotely on 

, they grew the majority of the food they ate and learned from other ex-city slickers now living off the land.

This wasn’t just a lifestyle overhaul. It was also their latest real estate investment.

“We have evidence that the growth path from the surrounding metro areas—Murfreesboro, Franklin, Nashville—will continue to move out to where our homestead is,” says Richard, who’s invested in rentals, spec homes, and hard money loans for over 10 years. “This will make it more valuable in the years to come.”

Country life has always had its appeal, and it became even more popular during the pandemic with the onset of remote work. Yet a new crop of land-hungry buyers is flocking to remote areas for a different reason: They can’t afford to live anywhere else.

Since mortgage rates began climbing in 2022, real estate prices in rural locations 

—over triple the growth rate of 4% in urban areas, according to Realtor.com. Nonetheless, life in the sticks is still cheaper, with the median list price in rural counties coming in at $299,950 versus $348,200 for their metropolitan counterparts.

Real estate investors have also shifted their focus toward wide open spaces to get more for their money.

“Many are taking alternative routes to break into real estate investing, and one of those routes is buying a property in a cheaper rural area,” explains Harrison Stevens at 

. This doesn’t mean you have to move there; many city dwellers run rural rentals remotely, a trend called 

. As Stevens explains, “People may live in a city for their job and can’t afford to buy there, so they’ll buy a rental property in a rural area and use that as a second income stream.”

Although rural real estate may be cheap, that doesn’t mean it’s risk-free.

“Rural purchases look simple on paper, but the unknowns can cost far more than a city lot,” warns 

, who bought land outside of Des Moines, IA, that, at first, “seemed picture-perfect—rolling hills, a pond, space for cabins. I only discovered after we closed that the soil wasn’t conducive to septic. It was a costly reminder that rural deals require an added layer of due diligence to know what that land can and can’t do.”

“The biggest advice I’d give is to understand your exit strategy before investing,” says Richard Robbins. “I have seen people purchase land they have to dump later for what they bought it for or less. Investors need to have some idea of the population growth and other factors that will make the property more valuable.”

Why demand for rural real estate is rising

Raising chickens is nice, but the main reason country life is hopping now is that it’s cheap.

Why demand for rural real estate is sky-high

Whether you’re shopping for a car, computer, or clothes, buying used tends to cost a lot less than buying new—except when you’re buying a house in 2025.

According to the latest Census data, the median 

 in the US is $401,800. That’s $33,500 

, which costs $435,300, according to the National Association of Realtors.

“This marks a significant inflection point in the housing market, reversing the historical trend where new construction commanded a premium,” says Ali Wolfe of housing data firm 

. “The shift, which began during the pandemic with a narrowing of the price spread, has fully materialized over the past three months.”

This rare role reversal emerged because a glut of new homes has entered the market just as high mortgage rates have sidelined many buyers. As a result, builders’ unsold finished inventory has hit a 16-year high, forcing 66% of them to offer incentives like mortgage rate buydowns—the highest share in five years, according to the National Association of Home Builders.

These deals have not gone unnoticed by real estate investors, many of whom have switched gears from flipping old homes to buying new ones as rentals. Aside from the cheaper purchase price, new homes also boast lower upkeep costs.

“The new-construction rental properties we’ve invested in have a maintenance budget typically coming in at 1% of the value or less, compared to as high as 5% for older rental properties,” says Nathan Miller, founder of 

. “For a $350,000 property, that can be as much as $14,000 saved per year. You can imagine how quickly that adds up.”

 break, that’s okay, since most new homes come with a warranty.

“The reason we’ve shifted from rehabbing to buying new homes is that we know a new home will be under warranty for a while,” says Jason Hull at 

, who has purchased three brand-new builds since the end of March. “This was good for us, as an AC unit was defective, and we’ve already made a claim.”

, who’s purchased two new constructions in the past 18 months (one a duplex), adds that he negotiated some sweet extras that amped up his savings. “I got a 2-1 mortgage rate buydown, negotiated $5k in closing cost credits, and for the duplex I got an appliance package upgrade, garage door opener install, and a landscaping allowance,” he says. “These concessions count for more than many buyers realize, as they not only eliminate cash outlay but also the time and logistical costs involved in sourcing these items post-closing.”

In addition, new builds can get rented faster. “I was able to obtain occupancy within two weeks of listing [because] I had marketed them as ‘never lived in,’ which always stands out online,” Naig adds.

Although the price of new homes versus old will vary by market, make sure to do the bottom-line math rather than focus solely on the sticker price.

“Integrate maintenance estimates, energy savings, occupancy rates, and the completion attractiveness of the tenants into your calculations,” says Naig. “New construction is an easier way for folks looking to invest passively.”

Curious about the best places to buy new constructions? 

Why new homes are cheaper than old now

The housing market is so out of whack, new construction now costs less than existing properties.

The weird reason new homes are cheaper than old

This summer marked the slowest housing market in 10 years. It was so slow, in fact, that the pace and volume of sales resembled what you’d typically see in the 

—when frigid temperatures, school slogs, and looming holidays cause real estate to go dormant until the new year.

This summer wasn’t just bad for buyers. Everyone suffered, from sellers to builders and beyond, according to a study by Realtor.com economist Jake Krimmel, aptly titled “

Cruel Summer: Why the US Housing Market Is Stuck

Still, since Labor Day is next week, it’s high time to turn the page and see what’s coming down the pike for fall. Spoiler alert: The forecast seems to be looking up.

Autumn’s biggest bounty may arrive on September 16–17, when the Federal Reserve will decide whether to cut interest rates. Currently, the odds of that happening hover at 

Rate cuts aside, the seasonal decline in buyers during cooler months means less competition and more desperate sellers. As a result, “fall and winter can be among the best times to buy, especially for investors,” says Krimmel. “With 25+% year-over-year inventory growth and price cuts on over one in five listings, we’re coming to the end of the most buyer-friendly summer since we began collecting data in 2016. I expect that trend to continue into the fall and winter.”

In particular, prices are falling fast in the South and West, so some investors may see this as an opportunity to buy low in growing markets (like Austin, TX; Raleigh, NC; and Charlotte, NC), which are likely to keep strengthening, adds Krimmel. Meanwhile, the Midwest and Northeast are likely to continue seeing rising prices.

“Summer was much slower for me as an investor,” admits 

 at Home Qualified. “Higher interest rates combined with higher prices in my region [New York] have made it harder to find properties that are cash flow positive. Buying today really means anticipating a rate drop over the next 24 months and refinancing to create more of a positive return. That method can be effective once rates drop to mid-5s, and historically, if that happens, home values will go up.”

Another standoff that might ease this fall is the rift between what buyers are willing to pay and what sellers are willing to accept.

“Seller sentiment appears to have shifted: We do a lot of direct-to-owner advertising for purchases, and we’ve seen a giant uptick in sellers looking to revisit offers that they previously declined,” says Ryan Dossey at 

. “Similarly, we’ve had buyers put in over-asking offers. I think we’re going to have a ‘green Christmas,’ with sellers being more realistic and buyers looking to take advantage of anticipated lower rates.”

A fall forecast for the housing market

Here’s how bad this summer’s housing market was—and why conditions may soon improve.

Real estate’s cruel summer—and a forecast for fall

Although homes in Fresno, CA, sell for $389,954 on average, Jimmy Fuentes just snagged a three-bedroom ranch there for $185,000. His secret for finding a deal? It was a foreclosure, which was hiding a nasty surprise inside.

“Water damage in the primary bathroom was extreme but was not visible from the street,” Fuentes says, adding that typically with foreclosures, “You are purchasing blindly.”

Fuentes spent $22,000 on repairs and turned it into a rental property. “It’s renting for $2,100 per month, with a 12% annual yield on investment,” he says. “In addition to the 34% price cut below market value, foreclosures do not require a lengthy price negotiation process. Cash deals are sealed in days, not weeks.”

However, Fuentes (who has purchased several foreclosures and helped hundreds do so as a 

) warns, “foreclosure investing is a game that demands steel nerve.”

 in July, an 11% increase from June and a 13% rise from July 2024, according to data analytics firm ATTOM. CEO Rob Barber noted, “The steady climb in filings suggests growing pressure in some markets.”

Foreclosures often end up in the hands of real estate investors because these properties are frequently riddled with risks that regular homebuyers can’t stomach.

“It’s 50% preparation, 50% balls, and not for the lighthearted,” explains Des Moines, IA-based investor 

. Foreclosures tend to be in a dilapidated state, and since banks are often eager to unload these homes quickly at auction, this may leave mere days to kick the tires. “You rarely have a chance for an interior inspection,” Naig explains. “So you have to take an educated guess and a calculated risk.”

One of Naig’s most memorable foreclosure gambles was a three-bedroom in Beaverdale, IA, that sat empty for two years. It was falling apart, with bursting pipes, ancient electrical, and a half-collapsed garage. “I bought it for $78,000, way below market value, but I needed another $45,000 for repairs,” he recalls. “Within five months, the property was completely renovated and sold for $175,000.”

Some foreclosures may even have residents who refuse to budge.

“The last foreclosure I purchased for $307,000 was a home in Miami that came with a squatter,” recalls Florida investor 

. “I evicted the squatter once, and they came back again! After that, I put plywood in all the windows and sold it as-is to another investor for $395,000.”

The foreclosure auction process can also be intimidating for the uninitiated.

“Auctions run the gamut from a low-key annual county meeting to a rowdy room akin to 

,” Naig says. The auction for his Beaverdale purchase had a “barracuda of an auctioneer. There were a dozen people in the room, three or four bidders. The key is not to get sucked into other people’s energies. My number was on a slip of paper, and I never went over that number. That discipline is what differentiates a strategic investor from an emotional buyer.”

Intrigued rather than scared? One surprising place to find upcoming foreclosures is in the local paper. “It seems like a relic from the past, but it remains one of the most reliable early indicators that a property is headed to auction,” says Naig. Even if you can’t inspect the property, at least do a drive-by—and, if you like what you see, arm yourself with preapproved financing or cash—and build 20% more into your budget to cover all the fun surprises in store once you open that door.

“I’ve witnessed people make a fortune at auctions, but I have also seen egos get costly,” says Fuentes. “Know your ceiling and walk away if it gets too high. Don’t let adrenaline add to your sums.”

Pros and cons of buying a foreclosure

Mortgage defaults are growing. Here’s why they often land in the hands of investors. 

The foreclosure boom’s hidden payoff and perils

Real estate auctions turn humdrum home sales into a fast-paced spectator sport, thanks in large part to the rapid-fire chant of the real estate auctioneer. To give you a peek behind what it’s like to step up to that podium, I spoke to Beth Rose of 

 in Maumee, OH. Here’s how she got her start, why real estate auctions have exploded in popularity, and what investors should know.

How did you become a real estate auctioneer?

 “I come from a family of auctioneers. My dad was a real estate broker who sold his Century 21 franchise back in the ’80s, went to auction school, then opened Rose Auction Group. I was 16 at the time and thought that was bizarre, because my image of an auctioneer was someone in jeans, a cowboy hat, and a big belt buckle. My dad? I never once saw him in jeans; he even mowed the lawn in his dress pants. My younger sisters and I started out working at auctions as the hot dog girls, then graduated to setup, and then we eventually went to auction school. My dad set us up as competitors. He passed away in 1998, but we’ve continued his legacy. I went to auction school when I was 18, so I’ve been an auctioneer for about 40 years and now teach at auction school. My three sisters are auctioneers, and my daughter is now a third-generation auctioneer. Even my 6- and 8-year-old grandkids can auction.”

 “I was 24 and wore a pink suit to an auction on Vogel Street in Toledo. I got out of the car and fell into a mud puddle. I was so nervous, I didn’t sleep the night before, I was covered in mud, and… I sold the house! I realized how I sounded and looked didn’t matter since they wanted what I had.”

Can you tell me more about that rapid-fire chant auctioneers are famed for?

 “In order to get your rhythm and momentum, auctioneers use filler words. You have this number, you’re asking for that number, and the stuff in the middle is filler. Mine are ‘woulda go, woulda make it, woulda bid…’ I’m so used to saying them that I actually have to think about it. There’s an art to it. I’ve done auctioneer competitions where you’re judged on bid calling, clarity, rhythm, poise, and presentation. I won the International Auctioneer Championship in 2016 and beat my daughter, Sara, by a tenth of a point. Sara won in 2017.”

 “Oh my goodness, yes—not just with foreclosures but regular homes, too. Sellers love auctions because there are no contingencies with the offer and the sky’s the limit. Buyers love auctions because of the transparency: You get to choose when you bid, at the time you want to bid, you can do it on your phone, online, in person, and it’s definitive that day. All the due diligence has been done prior to, or it’s waived. Everything in life these days is about speed and convenience. A live auction takes between 12 and 20 minutes. An online auction might last for a week, then get really busy in the last 15 minutes.”

Got any advice for investors on buying at auction?

 “With foreclosures, investors can get a heck of a deal. They can grab properties at auction, clean them up, then flip them or keep them as rentals. One of my investors called me to say that he just made $170,000 on a flip, $110,000 on another flip. But before you bid on a property, it’s important to ask all the right questions. Read through those terms at the auction and know what they mean.”

Do bidders ever get carried away and regret their purchase?

 “Not typically because when you win at auction, it’s an adrenaline rush. I’m sure buyer’s remorse has happened, but usually it’s when people couldn’t come up with the money. In that case, you just go to the backup bidder.”

What’s it like having everyone in your family in the auction business?

 “We’re all the best of friends, but also fierce competitors with each other. It’s made us at the top of our game. We just can’t talk about real estate or auctions at the dinner table with our mom. It drives her crazy.”

Real estate auctioneer advice

Here's how these fast-talking sales pros whip up bidding wars that are sights to behold (and hear). 

Sold! Confessions of a real estate auctioneer

, but a growing number of properties are listing for a whole lot less. Like, $1.

, a real estate investor and agent at Keller Williams NJ Metro Group, recently put a Newark, NJ, 

“I’d never listed for $1 before,” says DaSilva. But his gamble paid off: Within days, the listing attracted “hundreds of inquiries and dozens of offers” that ultimately pushed the final sales price up to $550,000, which he calls “record-setting for a three-bed 1.5-bath sale.”

Although some sellers might cringe at listing their property for a buck, DaSilva points out that 

 asking price is simply a starting point. “I have argued with sellers for years that the market dictates the sales price,” he says. “Here we are now with a proven concept.”

One-dollar listings are rare but on the rise: 

 were put on the US market in June for $1, a 24% increase from one year ago and an 82.9% jump over two years.

“The number of homes listed for $1 has climbed steadily as sellers look for creative ways to draw buyer attention,” explains Hannah Jones, senior economic research analyst at Realtor.com.

Between elevated mortgage rates and record home prices, buyers have been scarce lately. Even megamansions are being listed for a buck—including a five-bedroom, 5.5-bath, 6,000-square-foot house in Colts Neck, NJ, represented by investor and agent 

, who decided to give the $1 sales tactic a try for the first time in July.

“I have not listed like this before, but with the economic downturn, it’s a very different approach to marketing that drives more traffic,” Pavlushkin explains. And it paid off, with “tons of showings and multiple offers and tons of calls and questions.”

If there’s any downside to $1 listings, it’s that they get 

 much attention, often from non-serious buyers who can be a time suck to sift through. Or, if you’re worried your $1 listing won’t sell for the sky-high price you’re hoping for, you can always set a retainer that must be met before the deal can go through. Since buyers aren’t informed of what that minimum is, that leaves plenty of room for them to overshoot the mark.

And if you spot one of these $1 listings in the wild, making the winning offer will require your best negotiation skills. “You really want to look at comps [comparable properties] and understand the market,” DaSilva says.

“Ultimately, a home is worth what a buyer is willing to pay for it,” adds Pavlushkin—who is currently awaiting the outcome on that 

 in Colts Neck. Anyone wanna guess what this home will ultimately go for? 

, and I’ll reveal who came in closest once the deal has closed.

Real Estate Strategies

Mortgage rates are falling, and so are home prices

Why demand for rural real estate is sky-high

The weird reason new homes are cheaper than old

Real estate's worst summer—and a forecast for fall

The foreclosure boom’s hidden payoff and perils

Sold! Confessions of a real estate auctioneer

What’s the deal with all these $1 homes?

Let’s Make a Game Plan