In a Down Market, Purchasing a Home would be an Option?

Published by cravat | Filed under Buyer / Seller Tips, Cities, Miscellaneous, Real Estate, Shout Outs, Uncategorized

Everyone always wants to know how to determine the best time the market when buying your dream home. It is simply natural. Most especially if you are contemplating to buy in a down market where property prices are declining. Would you wait and if how low they will go? 

Few Buyers Should Buy Immediately

You may probably think that realtors and agents usually say this line. “This is the best time to buy.” Well, I will tell you the reason why:

a) If you are the seller who desire to purchase a more luxurious home in a down market, probably now could be the best time. The more that you prolong to wait to sell, the lower your price could get and your property could fall.

b) If you prefer to arrange for an alternate housing, a clever way is to sell now, hang on for a few more months, then buy your fabulous new home.

c) If your sell and purchase at the same time, you will still be in front of the race because the price reduction on the purchase is better than the loss on the sale.

Selling Your Property and Consider Your Loss

For instance, your current house is valued $500,000 but because of high inventory and limited buyers, you must decrease your price by ten percent. So, instead of receiving $500,000, you would get $450,000 and lose $50,000.

Selling Your Property and Consider Your Savings

If your are planning to transfer up to $600,000 house which is located in the same distressed market you probably could purchase that house at that same ten percent discount or $540,000. This could mean you had saved $60,000.

Selling and Reviewing the Buying Numbers1.   

1. So you “lost” $50,000 on the sale of your property

2.   But you “made” $60,000 on the purchase of your new home

3.    Does not that put you $10,000 ahead?

The expenses are clearly almost the same. On the other hand, the property you can pay for to purchase is an 8.25% is $100,000 less than the home you can afford to buy at 6.25%. If you wait for prices to further decline, the perceived value could be lost due to higher rates.

A best way to strategize is to balance and weigh all the positive and negative of real estate ownership before making the final decision to purchase or sell. Do not panic over newspaper headlines. Make an informative decision. Run and play around your own numbers.