Distressed residential real estate investment: Anticipation, valuation and negotiation

Diploma Thesis from the year 2012 in the subject Business economics - Investment and Finance, grade: 1, Management Center Innsbruck (Wirtschaft & Management), language: English, abstract: This thesis attempts to precisely define the term ¿distressed residential real estate¿, enable real estate investors to develop practicable methods, how to anticipate bubbles in residential real estate markets, how to valuate distressed properties and how to successfully negotiate about purchase prices with potential sellers of distressed residential real estate assets. The thesis will therefore analyze different residential real estate markets that previously experienced strong market fluctuations and corrections regarding conditions that influence the origination or existence of a bubble and accordingly deduce a schematic model helping investors to indicate the potentiality of an existing or developing (price) bubble in residential real estate markets ex ante. The thesis will furthermore cover the topic of valuation and elaborate modern valuation methods and techniques, which are used in financial valuation nowadays, and apply them ¿ if exercisable - for the use of valuation on real estate assets, more specific, for an investor¿s use needing applicable methods to appraise value of distressed residential real estate assets. The thesis will finally try to combine applicable findings of these two topics (bubble anticipation and asset valuation) and use these findings to comprehensively prepare investors for negotiations about purchase prices with potential sellers of distressed assets. Therefore the thesis will cover the topic of business negotiation, examine existing and promising methods and techniques and derivate applicable implementation for an investors purpose which is to acquire distressed residential real estate properties at discount inter alia resulting from negotiation proficiency.