Trading Up in a Down Market

With the real estate market as soft as it is today there are opportunities out there.  Many would feel that the upper hand is held by the buyers, and homeowners should tuck, run, and hang on.  Wait until the market starts to appreciate again so you can get more for your home (if you wish to sell or move).  The basic theory behind this holds true, but if you are not upside down in your house then “Trading Up” may be a great option.

By trading up I mean selling your home for a loss now, so you can buy a better home value for the future.  To put it into perspective, say you bought a home a few years ago for $200,000 and now the market value has dropped 30%.  You must price your home at $140,000 to get sold in today’s market. Then, you turn around and buy a $300,000 home that has dropped 30% in value for 210K.  That would be a $60K loss on your home, but $90K in savings on the new home purchase.  The best part about this is your net worth when the market rebounds.

To take the idea further, let’s say that the market later turns and appreciates 10% from when you bought your original home.  The original home would now be valued at $220,000 and you paid $200,000.  The home you traded up for would be valued at $330,000 and you paid $210,000.  That is quite a difference, and is a great option rather than staying in your home and hanging on for a rebound. Take advantage of the opportunity the market is giving you.  Aside from the increased dollar value you can obtain a larger home, a more desirable neighborhood, newer construction, updated, bigger yard, etc…..

In order to make this work, you cannot be upside down in your current mortgage.  You must also be prepared to sell your home at “current fair market value.”   You are trading up in today’s time of low home values to capitalize on the future when homes values are stable again.  This is not a procedure to go it alone.  You need expert advice form a qualified Tallahassee Realtor.  If you are looking to “Trade Up” please give Joe Manausa Real Estate a call at 850-386-2001.

Damian Costantino
(850) 386-2001

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