Woodhill Homes Blog

With today’s real estate market conditions, now is a great time to buy and trade up! “What?” you may say. But when it comes to buying and selling homes, I always suggest people look at the big picture when it comes to trading up. Okay, you may not get a dreamy windfall of cash you would like for the house you are selling, but if you have equity in your current house you can use that as a down payment on a better house. And if you need a better house (one that’s bigger, nicer finishes, different neighborhood, more energy-efficient or whatever), you would be crazy not to upgrade now. You have an outstanding selection to choose from and waiting will only cost you more in the long term. Think about it.

Consider the “Loss” on Selling Your Present Home:

For example, say your present house is worth $300,000, but because of high inventory and few buyers, you must reduce your price by 10%. So, instead of receiving $300,000, you would get $270,000 and “lose” $30,000.

Consider Your Real Profit:

Now, consider this. Say you bought this home 7 years ago and paid $100,000. You’re still ahead $170,000, less costs of sale, aren’t you?

Consider the “Savings” on Buying Your New Home:

If you are planning to move up to a $500,000 house, which is located in the same market, you could probably buy that house at that same 10% discount or $450,000. This would mean you had saved $50,000. So you “lost” $30,000 on the sale of your home. But you “made” $50,000 on the purchase of your new home. Doesn’t that put you $20,000 ahead?

Don’t Forget the Impact of Interest Rates:

Which way are interest rates moving? Are they moving up or moving down? If interest rates are near an all-time low and beginning to inch upwards, waiting could cost you more than you would think. You might not be able to afford to buy a home at any price.

• Each 1/2 point decrease in your interest rate gives you $25,000 more in purchasing power.
• Each 1 point decrease in your interest rate gives you $50,000 more in purchasing power.
• Each 2 point decrease in your interest rate gives you $100,000 more in purchasing power

Right now, you can get real estate in nice areas for prices that we haven’t seen in a while. So what if you take a little less for your current house? In three to five years when the market has fully rebounded you’ll have twice as much equity in the new house as you would ever have been able to build in the old house.

For more on why buying now is in your best interest according to famed money guru Peter Lynch, check out the “Ignore the Headlines” article from Dan Kadlec’s “Right on Your Money” column at Time Magazine. It’s more than just thought provoking.

Read full article here

More on Real Estate in Bend, Oregon

Popularity: 6% [?]

Share This

Trackback URI | Comments RSS