I know, everyone is worried about the market, but here is another reason to sell now: you may save more money on your new house if you are moving up! I have found this to be the case, and today Realtor.com Magazing sent out an article about it (copied below).
Stay with me on this. Let’s say that you are selling your home. It is worth about $200,000, but you only get 85% of market value. Maybe you did a price reduction, maybe you got a low-ball offer. You sell your home for $170,000. Ugh, you feel like you took a huge loss of $30,000. Now, let’s look at the home you might move up to. Let’s say it is worth about $350,000. They have to take a loss too, they have lowered their price and are ready to accept any offer. Their price is now only 85% of what they started out at and you get the hosue for only $297,500, a savings of $52,500!! If you look at what you “lost” on your home sale ($30,000) compared to what you “saved” on your purchase ($52,500), you actually come out ahead by $22,500!!!
Remember, these are not actual numbers, I am just trying to illustrate a concept. Here is the article from Realtor.com Magazine:
Why Selling Now Makes Sense
Home owners who are reluctant to sell because prices have fallen, should do the math, and realize that the market downturn could work in their favor, say practitioners in hard-hit, but still pricey Boston.
Their reasoning may work in many other parts of the country as well.
“People are finding houses at prices they thought they’d never see again,” says David W. O’Neil of Century 21 Spindler & O’Neil Associates in suburban Boston.
O’Neil points out to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.
In general, the toughest sell is people who bought about four years ago at the height of the market, says Zur Attias of The Attias Group at Barrett & Co. in Concord, Mass. But even for these home owners, selling now may make sense as long as they can at least break even.
He argues that almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district, but on a busy street. Or it may in a great neighborhood, but it’s a Cape, not a Colonial. These are things Attias calls “unchangeables.”
He says it’s a good time to sell if a seller can get rid of the most negative unchangeables in his current home, and replace them with better unchangeables in a new home. Once the market really turns around, the growth will be bigger in the better house, he predicts.
Source: The Boston Globe, Vanessa Parks and Jonathan Wiggs (04/13/2008 )