These days it seems that most Realtors are focusing buyers. Many agents do not want the task of selling a home in this market. You hear..."it's a great time to buy a home", it's a buyers market, "there are too many sellers and not enough buyers". Well I am going to make the argument that NOW may a great time to SELL your home.
Let's make a couple of assumptions. 1) Your current home is a 4 bedrooms, 2.5 bath, 1,500 square foot home in a nice neighborhood. Two years ago, your neighbor sold the identical home for $250,000. Data suggests that home prices have fallen in your area 10% over the last two years. You are interested in a larger home (3,000 square feet) and this home sold for $400,000 two years ago. Data suggest that home prices have fallen in this area by 10% over the same 2 year period.
Right off the bat, the data in table one suggests that you receive $25,000 less for your home. However, there are some positives. Based on a 6% commission rate (these rates are negotiable) , you will save $1,500 on real estate commissions. You will also save another $375 on closing costs (based on 1.5% of selling price). To sum it all up, you will receive $23,125 less for your house than if you had sold it two years ago. Now here is where most people stop...and they don't get
THE REST OF THE STORY.
The house that you want to purchase has also faced the same price drop. The home that would have sold for $400,000 is now ON SALE for $360,000. Right away, you are saving $40,000. You will have to put down $8,000 less for a down payment and your closing costs will be $1,600 less. Overall, you will be paying $49,600 less for this home. That is almost $50,000 in your pocket.
..but not so fast slick
Remember...you just lost $23,125 when you sold your old home. In the end, you will end up on the positive side. Your gain on the purchase of the new home will offset the loss you faced when you sold your old home.
In this example, the homeowner saved $26,475, is living in a home that is twice the size of the old one and paid less/square foot. So the next time someone tells you that this real estate market is only good for buyers.....tell them, "not in all cases"
Have a great day. I will be out here in Burlington Township, Burlington County, New Jersey trying to round up some sellers that like a good sale.
Leander McClain,
Realtor & Real Estate Consultant,
Exit Buyers Plus Realty, 15 E. Broad Street, Burlington, NJ 08016
609-505-6578
BINGO!!! You are right...people look at one side of the equation and forget about the other side. I share this with my clients ALL THE TIME! I think that it is just so much easier for people to focus on the negative than the positive. Personally...I like to look at the positive things in life...the blessings! GBU!
Leander... I love love love the comparison. That is excellent to point that out to someone looking to sell their home and purchase new. Many times they consider how they will take a hit but not how they will gain on the other end of the transaction.
Leander... I love love love the comparison. That is excellent to point that out to someone looking to sell their home and purchase new. Many times they consider how they will take a hit but not how they will gain on the other end of the transaction.
Leander,
Thank you for the information, it was very informative.
Pamela
Hi Leander, I wrote a blog that mentioned the "trade-up" buyer and than I found this blog. Wow, you did a fantastic presentation of this, I love your spreadsheet. Most people just don't see the the full story. Great post. Can I link your post to mine?
W-O-W!!!! That was perfectly written! Our very first blog in AR (A Math Teacher's Take on the Market) was an attempt to share this exact message, but you did it so much more clearly! LOVE the chart! Oh how I wish we could get every seller or thinking-about-selling homeowner to read this. Great job!
So true! The Realtors I work for try very hard to get this message across to people, but you have explained it more clearly than I've ever seen before.
Leander, if the fanancing is there, then why not? Great deals abound!
Thanks
Bo
Leander - You did a great job showing why seller now could be a good thing.
Leander - I was in the process of preparing a similar blog about Trading-up when I across this. I think that you have covered the point well and your chart is excellent. If you don't mind, I may use the same concept with numbers more appropriate for my area.
Erik- Have at it my good friend. Information is free. That's why we are all here
Have a great day
Leander