Is it Time to Sell Now?

Sell Now or Wait?  I am working with several clients who want to “move up” or “downsize” their house.  The catch 22 for sellers is this:  Should I sell now or wait to possibly sell my house for more later?

Another dilemma for sellers is where to go after their house sells.  If you sell your house today will you be able to find a replacement house?  There are strategies that we can use to insure that you will not be homeless!  Please contact me to discuss the strategies that will best address your specific situation. 

The Bottom Line:  My feeling is that if you want to make a move (either a move up or a downsize) selling and buying in the same market environment is a “wash” and it accomplishes your move up or downsize goal. 

The example below is just one illustration that I thought presented an intriguing point. 

Thinking of Moving Up? Don’t Wait.

Convinced that prices have just begun to rise, many homeowners are waiting for their property value to increase in value before selling and moving up to a nicer place.  That is likely a mistake.

“If you’re selling one house just to move up to another, it does you no good to wait for prices to rise — the price of the move-up home will increase faster than the price of the place you’re leaving behind,” said Redfin CEO Glenn Kelman.  “But waiting until interest rates rise is what can really cost move-up buyers.  Most economists believe that rates at some point will go back to historical norms, well above 5%.  This means that most move-up buyers are likely to be trading in a low-interest loan on the old place for a higher-interest loan on the new one.  In this scenario, the only winner is the lender.”  (Selling and buying in the same market environment is a “wash”.  You can accomplish your move up or downsize goal in any real estate environment. – TB)

Sure, if you wait to sell your current home, you will probably get more money for it in a few years, but the price of the better home is increasing as well.  What’s more, interest rates are still very low, but they will not stay that way for long.  Not to mention, moving now means you get to live in a nicer house that much sooner.

You can see that even though this homeowner would make $61,000 more by waiting to sell, the new house is $64,000 more expensive too, a difference of $3,000 in favor of moving up now.

But that’s not the complete picture.  The monthly payment, which is driven by interest rates, will be lower for those who move up now vs. later.

Just in the next 12 months, the Mortgage Bankers Association expects rates to rise to 4.4%, which would mean a $130 higher monthly payment.

And that’s a conservative estimate.  A typical interest rate, if you look at the past 20 years, is more like 6.5 percent, which is about $500 more per month, or an additional $6,000 per year out of pocket for the move-up buyer who waits.

I am always available to discuss your move up or downsize plans with your specific situation and goals in mind.