BUY NOW! Part III – Suppy and Demand and Homeowners Who Have a Home Listed for Sale
by Evan Vanderwey on 19/05/10 at 10:47 am
If I heard the following phrase once, I’ve heard it a thousand times: “I’ve just been sitting here doing the right thing and making my payments and I’m the one who’s getting the short end of the stick.”
Well, yup, kinda, but kinda not, too.
Yes, now that the housing stimulus is over, if you want to sell your home, you will have to drop your price. Supply and Demand says so and Supply and Demand don’t lie.
Yet if you are selling in order to buy another home, and like many, your next home is priced higher than the one you are listing, then now is the best time for you to drop your price and buy up.
The numbers have never looked so good. Here are a few things to think about:
Ignore what you paid for your home. This is an irrelevant number – the market is the market. You need to let go of your emotional attachment to the price you paid for your home.
How do I make cash flow work? This is the tricky part and usually requires the help of a qualified mortgage advisor. There are ways to get out of a home for a little less than you owe and be able to get into your next home with little or no money down. We just have to be a little creative. The benefits often outweigh the costs – it’s worth a look.
I may sound like a broken record on this one, but talk to your lender and your Realtor about renting out your old home, making a move and purchasing without selling your existing home. This makes sense especially if you stand to take little or no cash from the sale in this market anyway. Homes in almost any neighborhood have a market for renters. One of my clients has rented his 3500 square foot Okemos, MI home out for over $3000 per month for the past 12 months. Another few years and we both expect he can sell the home (maybe to the current tenant) for as much or more than he owes. Let the up market do the work.
Get out of debt. This may sound misplaced, but in most situations when I talk to clients who already own a home and want to know how to make the most of this opportunity market, I tell them the same thing: Make a plan to pay off all consumer debt and keep it paid off. Your ability to make a wise transition in this market is almost zero if you have consumer debt. Debt will kill you. Get rid of it this year while rates are still low. Make a decision to pay it off once and for all.
