Trade-up Your Home and Buy Now

Is it time to trade-up and sell your home now? That's a question I was emailed recently and here's my answer.

Please understand that you have to sell your house first (that's only if you don't want to carry two mortgages) to trade-up. And if the pricing and timing is not right, you are taking a big risk. Or prepare to have your home sit on the market for a long time while you pull your hair out and naturally blame your real estate agent. Have an honest talk with your agent and study the comparatives realistically for a starting price.

With that said, realize the value of your house has more than likely fallen, the price of higher-end homes has also dropped. So, with that in mind proceed with caution and do your homework. Take a good hard look at your finances and determine if you have a reasonable down payment at least 5%, good credit and documented or trackable income. If everything looks good, please study your interest rates/terms and only sign a financially responsible mortgage. (I am a Realtor, not a loan officer or mortgage lender, so check with your lender for specifics).

Now, if you are still undecided if this is the time to trade up in a buyer’s market, please read the following example.

• Let's say your home value is down 20 percent to $370,000. But don’t forget that in today’s buyer’s market, higher priced homes are also dropping in price.
• But for argument’s sake, let’s say that a $600,000 move-up home has also dropped 20 percent in value and now sells at $480,000.
• If you sold your home today for $370,000 and purchased the larger house for $480,000, the difference in price would be $110,000.
• But if you waited to recoup the 20 percent value on your home and sold it at $444,000, chances are that same move-up home would also move up in price to at least $576,000.
• That’s a $132,000 price difference between the two homes.
• So by selling today, you would actually save $22,000. Good Luck.