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Posts Tagged ‘offer’

Several buyers who have visited my recent open houses have told me they hope to take advantage of the market and buy a higher priced home.
The low mortgage rates and price discounts have created an excellent opportunity for home owners who have equity or the financial ability to trade up to a more expensive home.
The graphic below illustrates how trading up can actually be a better deal now, even if the value of your current home is down.
If you wait for the prices to go up, the proportional cost of trading up will be higher.

CLICK IMAGE TO ENLARGE

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So the stock market is up, much to many peoples’ surprise, and it does feel like buyers at open houses are more confident! I rarely get asked how much further the prices will drop. More often people will ask if they have missed the boat or how much time do they have before prices move up.

A surprising 69% of the properties in the $400-$800K range (in the 6 local cities where we represented a client) had multiple offers in August. The multiple offer pattern is not the massive overbidding it was earlier in the decade. Buyers will express shock at the competition and understandably not wish to be bid up. Sometimes 4 offers will all come in within 10K of each other. Other times there will be one low ball offer, despite knowing there is competition, one at asking and the others maybe 3-10% over asking (depending on the price it was listed at, availability of inventory etc). Many times, the buyers agent will be in the position of saying to the listing agent that their buyer did not wish to be bid up in competition but really wants the house and would consider a counteroffer.The challenge then is to hope you get a counter and your offer is considered.

The move-up buyer market is still slow with many people who would like to trade up being unable to do so. However several banks are getting back into jumbo loan financing, and there is even talk of stated income loans again becoming available…. These really can be useful for the self-employed!

If you are thinking of buying a more expensive home, don’t assume this is not a good time to make a move. Consider the benefits of selling today for 15% less than you may have sold for at the height of the market, and buying a replacement home at that same 15% discount. For example, if your home is now worth $725,000 or $128,000 less than before, the $1,767,000 home of 2-3 years ago may well be purchased for $1,500,000 today or $265,000 less- for net savings of $137,000. Reduced sales prices also result in a savings of buying and selling costs of approximately $11,000, and long term annual savings of about $15,000 in mortgage and property tax expenses.

NOW may be an advantageous time to make a move, I’m always happy to be a resource for people considering their options. I can also send you an Excel sheet with some formulas, if you’d like to play around with numbers and see how much you would save by buying a bigger house!

Doing my part to stimulate the economy!

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