Connect with us

News

Opportunities for Africa to Deepen Financial Inclusion and Development

Published

on

[ad_1]

When people can participate in the financial systems, they are better able to start and expand businesses, invest in their children’s education, and absorb financial shocks.

Sub-Saharan Africa has a population with most lives being at the economic downstream, and most likely underdeveloped. The financial inclusion gender gap and income gap persisting just like in other continents, though higher in Sub-Saharan Africa. World Population estimates based on the latest estimates released on June 21, 2017, by the United Nations, shows Africa continues as the second largest continent with a population of 1,256,268,025 (16% of the population of the world) and by the end of January 2018, 40.2% living in urban areas.

The continent has the highest fertility rate of 4.7% (Oceania 2.4%, Asia 2.2%, Latin American and Caribbean 2.1%, Northern America 1.9% and Europe 1.6%) compared to the other continents with a yearly population rate change (increase) of 2.55% – the highest among all continents. Most of its people (59.8%) have lived downstream (rural areas and villages) sometimes out of the mainstream economy. Policy targeting could be difficult in such scenarios, and identifying people who lack access to financial and economic inclusion comes with a huge financial cost in itself, though the benefit in doing so outweighs the cost in mere numbers and requires commitment from leaders and managers of the respective economies. Coupled with a universal phenomenon of non-perfect, untrusted, and in some cases non-existing data on the continent, that could make decision making imperfect and data unreliable, affecting plans, policies and the potencies to resolve stated challenges or improving the economic and social fibre of countries.

The struggles of the financially excluded come from barriers and reasons as access, social and cultural factors, income, education and many possible lists of others. Financial exclusion arguably is one of the reasons some economic policies lack potency to effectively target well on the citizenry with its results in persistent poverty and inequality. Lack of access to basic needs like an account either at the bank or mobile money could mean significant possibilities of opportunities untapped. Globally countries have realized the importance of achieving inclusive societies and supports efforts at maximizing financial inclusion. Sub- Saharan Africa has made some strides over the years in financial and economic inclusion in this regard at individual country levels.

Efforts ongoing in Ghana include a commitment to promoting and prioritizing financial inclusion. The country made specific and concrete commitments to further advance financial inclusion under the “Maya Declaration“ since 2012 and has an ambitious target of achieving 75% Universal financial inclusiveness of its adult population by 2020. Ghana currently has 58% of its adult population having access to financial services and is also finalizing its National Financial Inclusion Strategy which will become the guiding document and reference for inclusive actions, stakeholder roles and responsibilities spelt out for all.

Kenya, however, has earned global recognition in leading the all others in the world in mobile money account penetration, and with twelve other sub-Saharan African Countries following, researchers show. The rate at which African countries are projecting innovation technology for digital financial inclusion is impressive. The country has made giant strides in its financial inclusion commitments, especially under the Maya Declaration.

There has been some paradigm shift in Information and Communication Technology and its importance which is being considered as a factor of economic growth. ICT has the ability to provide services with minimal cost, improve innovation, and provide infrastructure for convenient and easy to use services, it can also provide a route to access many auxiliary financial services.

At the macro level, digital innovation influence economic development and economic policy effectiveness.The benefits ICT enabled financial services include the possible creation of employment- mobile money vendors, increases in revenue receipts of government, helps firms productivity (both private and public), aid in cost control and efficiencies, and Could contribute to rural development and governance: Governance and revenue mobilization efforts, especially at local government levels, can be enhanced through ICT which aids in overall improvement in corporate governance. Importantly, Innovation Technology can help in the deepening of financial inclusion either through access, usage, reducing risk and improving quality of services, thus, per formula for Financial Inclusion (FI), thus, FI = (Unlocking Access + Unlocking Usage + Quality) – Risk.

Access to financial services can generate economic activities-Sophisticated use of financial services even presents bigger economic and social possibilities for the included. In Mexico, a research by Bruhn and Love revealed that, there were huge impacts in the economy in Mexico, that is, 7% increase in all income levels (in the local community) when Banco Azteca had rapid openings of branches in over a thousand Grupo Elektra retail stores when compared to other communities that branches were not opened. Also the savings proportion by those households in the local community reduced by 6.6%, a situation attributed to the fact that households were able to rely less on savings as a buffer against income fluctuation when formal credit became available.

Here, it must be noted that through savings is encouraged, the reduction in savings by 6.6% means more funds can rather be channeled for investments into economically viable entities or services. As the cycle continues, and in sophisticated use of financial services along the financial services value chain, they will need to save however for other investments later. Similar or even more positive correlation is observed if the medium of access and usage is through innovative technology.

Using Digital Financial Inclusion Strategies in Humanitarian Services

Despite the use and usefulness of financial services in crises situations, financial exclusion is particularly acute among crisis-affected countries. 75% of adults living in countries with humanitarian crises remains outside of the formal financial system and struggle to respond to shocks and emergencies, build up productive assets, and invest in health, education, and business.

Researchers continue to show the growth in acceptance of electronic payments especially through the use of mobile phones. There is growing evidence supporting digital financial inclusion. GSMA in its reports revealed that there were 93 countries between the periods of 2006-2016 of with 271 mobile money operating service providers which had registered over 400 million accounts globally. They give some evidence in some countries – which have been receiving humanitarian assistance- where there is growing acceptance of digital financial inclusion through use of a phone.

In Rwanda significant numbers of refugees used phones for mobile money services whiles some do so commercially for service fees. In Uganda, Refugee communities are noted for use of mobile money service as per the report. This has necessitated MNO Orange Uganda, a telecommunication firm to expand mobile money service to refugee communities by building a communication tower to improve access and usage of the services. In Pakistan, one of the largest refugee communities- third largest- has the government using mobile money for cash transfers to refugees. The evidence abounds and this calls for humanitarian agencies to rethink and reconsider digital inclusive financial services beyond the current numbers. In Lebanon (The largest refugee community) those on humanitarian assistance uses ATM issued by aid organizations to access their cash transfers.

Sarah Bailey, however, observed that humanitarian areas that were receiving cash transfers through mobile money could increase the use of certain services but does not automatically lead to widespread or sustained uptake. People may prefer to continue using informal financial systems that are more familiar, accessible and profitable. Her study revealed that that, the provision of humanitarian e-transfers, even when combined with training, was not sufficient to enable the vast majority of participants to conduct mobile money transactions independently.

The findings are certainly acceptable in the short run per our knowledge. However, on a long-term basis and with financial capability activities – not just training- the results could possibly be different. Financial capability activities deal with not just training and education, but the overall financial health and well-being of the people. And this should be done in a hierarchy- bits-by-bits- and not at a one leap jump approach. This seems to have been echoed by the United Nations. According to Ban Ki-moon as cited in advised that we must return our focus to the people at the centre of these crises, moving beyond short-term, supply-driven response efforts towards demand-driven outcomes that reduce need and vulnerability. Financial inclusion strategies may not lead to widespread uptake within a few days, but evidence abounds that in a long-term, it could.

The thirteen countries in the world with the most mobile money penetration today had some being on humanitarian support just a few years back-. Sustained access and use of innovative technology for inclusion then would have a better impact on them the more today.

Undertaking a case study on the use of digital means for humanitarian transfer will show that in the short term run there may be lack of interest or even rejection. Coupled with regulatory barriers and other barriers mentioned, people during a humanitarian crisis may not really be thinking much of connecting to the economic system on the whole or how their support comes (This is the business of policymakers on humanitarian service) but rather be much interested in survival within a short run. The psychology of that period of need is centred on – What is needed is the urgency of support – money – physical cash in most cases to enable them to get the basics of security and food with the most liquid instrument. Humanitarian communities have needs just as all other communities within the financial services need a framework.

Indeed evidence suggests there have been few instances only worldwide where the use of digital transfers in humanitarian transfers has led to widespread use of services. Digital transfers in humanitarian services must be a process and done within the particular context of time. In this sense, the digital strategies must be humanitarian, and must embed in the social and behavioural change financial capability activities capable of two-way communications with practices on usage and the benefits it brings in the long term- It must be in a hierarchy. Simple financial needs should be met before sophisticated needs. Any deviation will of course results in lack of interest in the services.

Howard Thomas observed that “Financial technology still leaves out swathes of people, and this means missed opportunities for development,” And in some cases, community structures may not be innovative or agile enough to allow new technologies to spread, he adds. “Savvy entrepreneurs are not necessarily from established authorities. Sometimes it’s a matter of identifying individual leaders, networks or pathways through which to promote new technologies.”

Indeed there have been some lessons however on how to manage humanitarian remittance, the parameters, however, are that financial inclusion is a continuous and sustaining effort of providing access and usage of financial services in a sustaining and responsible manner which meets the needs within a reduced risk – it is not just one time project of implementation policies at speed but rather concentrate on meeting the basic before sophisticated needs. Within a humanitarian certain, a complex multiplicity of issues may serve as barriers to using digital financial services including location and urgent needs; however those barriers when managed within a considerable period and coupled with financial capability activities (the act of complete financial well-being), then favourable results would be achieved.

The use of behavioural change financial capability education, training and practice into humanitarian communication on digital transfers would help in improvement in the uphill acceptance over a period of time. sub-Saharan African countries have been realizing some tremendous gains in the use of innovative technology, and expansion of ICT services and infrastructure on the continent. Its study time past points out those countries on the continent totally made revenues amounting to 5% of Gross Domestic Product (GDP) from telecommunication related services as compared to European countries where revenues from the telecommunication services represented 2.9% of their total GDP.

Sub-Africans Countries need repositioning and further investment in the “digital economy” in order to open up and benefit fully inclusiveness of their economy. Here our interest is in mobile technology and innovation which is the critical avenue that Africa could use mostly in achieving financial inclusion within the short to long term.

Kenya is making giant strides and leading the way in digital innovation for mobile financial services globally. Researchers have shown that sub-Sahara Africa countries are leading the technological innovation drive in the usage of mobile financial services.Kenya and other Sub-Saharan African nations are making the greatest strides in mobile money accounts penetration and with lots of opportunities foreseen. Globally the thirteen countries that mobile account penetration has been over 10 %, all 13 are from Africa -Botswana, Cote d’ivoire, Ghana, Mali, Kenya, Somalia, Rwanda, Namibia, Tanzania, South Africa, Uganda, Zambia and Zimbabwe (ranging from 10%-58% for the 13 countries).

Kenya is leading at 58% mobile money account penetration, with Somalia, Tanzania and Uganda “following closely” reporting around 35%. Namibia out of 13 countries has the least of mobile money penetration of about 10% (still higher than all others in the world except the other 12 African countries). Mobile money account is recorded to be widespread in East Africa (20% and 10% of adults have mobile money accounts and mobile money account only respectively) than any other region.

Firms providing financial services, be it services or infrastructure is the most important and unique set of stakeholders who should be encouraged to take the lead roles in financial inclusion activities and implementations. Financial services firms are uniquely positioned, to use their existing infrastructure and leverage to creating access, and usage of digital financial services.

They do so effectively and at a lesser cost as compared to government agencies because they can do so through their already existing departments as the marketing and customer service departments. Financial services firms are driving innovation for digital finance across the globe. Firms as GCAP have been investing in solutions to accelerate financial inclusion. It announced that in its call for proposals on innovative digital technology with huge potential to advancing the financial inclusion drive in sub-Saharan Africa, out of the over 200 applicants and proposals submitted, Financial Technology (Fintech) firms submitted (56%), Financial Services Providers (18%), Non-Governmental Organizations (NGOs) (13%) and Technology Services Providers (9%).

Growing evidence from other similar calls suggests that there is a trend, that the journey of using innovative technology and financial inclusion in the sub-Saharan African is not only picking up but even shows a rather promising outlook for the future, the opportunities for countries in the region are enormous for nations in advancing financial inclusion.

The call now is for countries at their policy levels to position themselves, armed with policies and willingness of governments to support and collaborate with the private sector to drive financial inclusion activities. However, to further enhance financial and economic for much better gain is a continues process and does not take just a few days but undoubtedly without collaborations between public-private role and decision establishment and support, it will take us rather too long. Collaboration is therefore important for financial inclusion drives and actions.

For governments or the public sector, their support in creating the needed supportive framework and regulations for the industry is important. Regulations and environment that supports innovation and drives whiles customer rights are supported are so much needed in this sector. In providing support and helping in creating an environment for financial inclusion activities to make the required impacting effects, government policies must have some balance of care. By doing so, any policy by a government on financial inclusion that does not take views from other important stakeholders may be implemented at last, but not without difficulties and in some case unreasonable delay in implementation.

This can be attributed to a variety of reasons: more importantly, policies may be concluded, but if Financial services providers are not ready or not able to implement those policies, then, problems of “distressed“ policies then begin to show. In financial inclusion drives, success depends mostly on collaborations for improvement between the public-private sectors.

The Opportunities for sub-Saharan African Economies

The opportunities exist for groups of people who need access and usage of financial services yet unable because of the barriers they confront mostly. Sub-Saharan African governments and private stakeholders can improve on the regulatory constraints and allow for the tap in technology innovation respectively to design solutions that will open access and usage of financial services

An important Segment of organized groups usually out of the formal financial economy thus, the “Savings Groups” always have their common values and beliefs most often deeply rooted with cultural and social entrenchment that must be considered when targeting with financial inclusion products and designs.

The groups usually common in Asia, sub-Saharan Africa and Latin American come together for social and economic benefits and supports. They have different specific objectives but commonly among reasons are for group savings, group insurance, good trading and all kinds of group support systems. At best design of product and services for “savings groups” if the top is successfully accepted can only be through a consultative process, sometimes customized or tailor-made services (most appropriate where possible) and winning the genuine interest of the groups.

There are over 14 million members of “Savings Groups” across 75 countries in sub-Saharan Africa, Asia and Latin America, representing a promising platform for financial inclusion in under-served markets. Savings Groups offer an entry point for financial service providers to isolated communities; they are organized, experience and disciplined; they aggregate demand across many low-income clients, and they have identified needs that financial service providers can address. Also, these groups are very goal oriented and purposeful but lack certain financial services- Some basic needs like accounts and payments and others sophisticated needs like saving platforms. Tailoring products to meet these segments who lack access to some financial services and are in need of those financial services would create opportunities for financial inclusiveness.

Prioritization of digital payments is one way of minimizing corruption within expenditures, be it the private or public sector. Digitizing payments means better tracking of records of payments throughout the value chain of spending and transfers. In the Agriculture economy, it means that when the government pays 1 million dollars ($1.000.000.00) directly through “mobile money` to its citizenry for goods and services, then its most likely that, subject to cost of the transaction, farmers will receive their funds intact and same. The vulnerable citizen would then have value for money in dealing with the government whiles having to benefit from the opportunities that having an account and using it comes with. Such is not the case when physical cash changes hands in payments.

The adoption level of digital financial inclusion with mobile money is generally high for sub-Saharan African. Stakeholders in the Public in the region can leverage its strong foundation and application of mobile money services to scale up the use of digital payments, but courses they must be the backing infrastructure to expand access as well. Increase in account ownership as a foremost financial inclusion indicator has primarily been through financial institutions except those recorded in Africa where mobile money accounts drove the growth in accounts ownership from 24% to 34% in 2011 and 2014 respectively.

An area Africa is making giant strides – Mobile money account penetration. Accounts ownership and its definition have changed over just three years when Global Findex Database launched its first data for comparable indicators among countries on financial inclusion. In 2014 it considered mobile money accounts as recognized accounts in their right, hitherto in 2011 that wasn’t the case. The opposite was rather the accepted case, and rightly so. Today the digital disruptions in the financial, telecommunication and economic arena are having is impacts.

For policymakers and private sector stakeholders, more keenly important is the fact that 5 of the thirteen sub-Saharan African countries (The only five in the world) – Somalia, Uganda, Côte d’Ivoire, Tanzania and Zimbabwe have an adult population with more mobile account than they have from a formal traditional financial institution. What this means is that, in those five countries, an ordinary man on the street is more likely to have, use, trust and save in a mobile money account or wallet than saving with a traditional formal bank account. This comes with enormous opportunities and breakthroughs. Digital payments are comfortable, fast and less expensive than physical cash payments platforms.

Tailoring products to meet these segments who lack access to some financial services and are in need of those financial services would create opportunities for financial inclusiveness. Prioritization of digital payments is one way of minimizing corruption within expenditures, be it the private or public sector. Digitizing payments means better tracking of records of payments throughout the value chain of spending and transfers. In the Agriculture economy, it means that when the government pays 1 million dollars ($1.000.000.00) directly through “mobile money` to its citizenry for goods and services, then its most likely that, subject to cost of the transaction, farmers will receive their funds intact and same. The vulnerable citizen would then have value for money in dealing with the government whiles having to benefit from the opportunities that having an account and using it comes with. Such is not the case when physical cash changes hands in payments

The adoption level of digital financial inclusion with mobile money is generally high for sub-Saharan African. Stakeholders in the Public in the region can leverage its strong foundation and application of mobile money services to scale up the use of digital payments, but courses they must be the backing infrastructure to expand access as well. Increase in account ownership as a foremost financial inclusion indicator has primarily been through financial institutions except those recorded in Africa where mobile money accounts drove the growth in accounts ownership from 24% to 34% in 2011 and 2014 respectively.

An area Africa is making giant strides – Mobile money account penetration. Accounts ownership and its definition have changed over just three years when Global Findex Database launched its first data for comparable indicators among countries on financial inclusion. In 2014 it considered mobile money accounts as recognized accounts in their right, hitherto in 2011 that wasn’t the case. The opposite was rather the accepted case, and rightly so.

Today the digital disruptions in the financial, telecommunication and economic arena are having is impacts. For policymakers and private sector stakeholders, more keenly important is the fact that 5 of the thirteen sub-Saharan African countries (The only five in the world) – Somalia, Uganda, Côte d’Ivoire, Tanzania and Zimbabwe have an adult population with more mobile account than they have from a formal traditional financial institution. What this means is that, in those five countries, an ordinary man on the street is more likely to have, use, trust and save in a mobile money account or wallet than saving with a traditional formal bank account. This comes with enormous opportunities and breakthroughs. Digital payments are comfortable, fast and less expensive than physical cash payments

Recommendations

1) Regional and sub-regional bodies in sub-Saharan Africa should take up the financial inclusion drive as a priority and ensure peer-to-peer commitments of its members based on individual country socio-economic dynamics.

2) Each sub-Saharan African country should develop a National Financial Inclusion Strategy in a highly consultative manner at their country levels to guide their efforts.

3) Sub-Saharan African governments should continuously support ongoing literature and research work on Financial and Economic inclusion to provide reliable data will guide the policymakers developmental aspirations and economic policies. Therefore countries should set up Financial Inclusion Research Fund as part of their National Financial Inclusion Strategy to support continues research on financial inclusion issues for their jurisdiction.

4) Sub-Saharan African Countries should commit a percentage (at least 1%) of their annual GDP as the budget for Innovative technology for the support of the digital economy stimulus for sectors like financial service and other industries to perform.

5) Efforts should be made at country and regional levels to make the use of financial services delivered electronically cheaper – best practice is Wechat and AliPay payment solutions in China. Wechat specifically has no cost build up for use of its platform for payment of goods and services, therefore promoting the use of mobile phones and users can transfer cash and make purchases digitally for goods costing as low as half a dollar. It is practically possible to pay for an item bought at an amount which is less than a dollar with no additional fee except the cost of item only. These are some of the readily felt benefits of Innovation Technology within the banking space.

6) African government set up support investment funds and partner firms which can design innovative technologies in the area.

[ad_2]

Source by Mark Yama Tampuri Jnr

News

Where to Find Those Efficient and Hardworking Affiliates?

Published

on

[ad_1]

Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.

Freelancers

Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.

Advertise!

The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.

[ad_2]

Source by Lina Stakauskaite

Continue Reading

News

Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them

Published

on

[ad_1]

The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.

[ad_2]

Source by Robert W. Dudek

Continue Reading

News

Useful Tips To Build The Best Gaming Computer

Published

on

[ad_1]

Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.

[ad_2]

Source by Damien Oh

Continue Reading

Tags

Live Statistics

Trending