So let’s just say you’re a normal person watching the real estate market loosely for the past couple of years. You know the market topped out a year ago, you know the market has come down somewhat, but you have your own personal goals and are hoping to trade up from your $300K house in the next year or so. Sure, the market is squirrely now, but how do you take advantage anyway to achieve your goals? How do you prepare for the eventual move-up?
1) Get to know market values. There are two great ways to do this. Number one, sign up to to receive new listings by email for comparable homes in your neighborhood. Most move-up buyers do this on a limited basis, focusing only on the neighborhoods they want to move to. But you also want to do this in your own neighborhood to become familiar with values and comparables.
2) Go to open houses. Not just those in the neighborhoods you want to move to, but those in your own neighborhood as well. In this way you’ll get to see what your neighbors are asking, how well presented the homes are… in essence, the competition. Your email service will alert you as these homes are reduced from their pie-in-the-sky prices to more realistic ones that actually sell.
3) Stay on top of local media. Not just the local paper, which is a valuable source of real estate information, but also local blogs, discussion boards, listings on Craigslist, local classifieds and other online websites that focus on real estate.
4) Pay attention to national real estate media. National trends often repeat locally. Subscribe to free, real estate industry email newsletters such as Inman or Realty Times and you’ll always be in touch with what’s happening in real estate.
5) Think about prepping your home for sale. That means decluttering, depersonalizing and storing away all that stuff that makes your home specifically yours. Become an HGTV addict. Watch Designed to Sell, Bought & Sold, then switch over to Fine Living for Real Estate Confidential. Get rid of the crappy old furniture, pass along those wedding gifts you’ve never used, and clear out the closets. Moving is the perfect opportunity to purge, so start right away.
6) Watch the area where you want to move. Get the new listings by email, go to open houses, talk to your friends, relatives and coworkers that live there. Over time, as you get to know your target area, you will realize when a good deal presents itself. This is what usually drives the move-up buyer to act. If your house is pretty much ready to go, this makes the whole process easier.
7) Know your financial options. Prior to making any kind of offer on a new home, you need to know what you can afford. Some people can afford two payments for a few months, which means they can make a stronger offer, non-contingent on the sale of their current residence. Some people can do a bridge loan between two properties to make a non-contingent offer possible. Others can’t do either of these and truly must sell their current residence to make the whole thing happen. Sellers generally hate contingent offers due to the uncertainties involved, but in a slow market they will sometimes consider these. Talk to your lender, then talk to your Realtor to work out the best strategy for your circumstances… to make the most of this market, you need to think strategically.
7 comments
Great advice, thanks for posting it. I have a question though, I have done quite a bit of renovation, but I am delaying the rest because I am not sure what would be the most appealing to a potential buyer, I want to sell in the year or two, but I am not ready to list right now. I am sure some realtors could tell me, but I don’t want to waste their time- is there any resource that you know of who could evaluate improvements with saleability in mind?
2Sleepy, if you click on the Designed to Sell link in the article, that will take you right to the top 35 things you can do to improve the value of your home prior to sale. In a nutshell, buyers like nice/newer kitchens and baths, spacious light-filled rooms, neutral colors and lovely, landscaped yards.
Thanks Diane, I actually looked at that & I watch that show; I guess my question is more complex, for instance, tear out a pantry that separates the dining room and kitchen and replace it with an island that would open up the space, or leave it? Spend 10k on a bathroom reno and leave the stupid tub that sort of sits in the bedroom or 20k and move walls around to move that tub into the bathroom. I guess what I am looking for is an ‘expert’ who can evaluate those kinds of issues and tell me either ‘go for it’ or OMG don’t even consider that, buyers would just hate it. The ‘good’ stuff is mostly done; granite countertops, hardwood floors, slate entry and fireplace fronts, etc. I’m just left with the scary decisions that might come to haunt me when I sell this place
The worst time to trade up houses is in a declining market. Why? Because you take on more leverage, and stand to lose more dollars. Downsizing is a better idea in these uncertain times, as it reduces exposure. Think about it this way, a 15% loss of value on a $500k home is $75k, while a 15% loss in value on a $300k home is a more modest $45k. Neither is good, but the losses add up much more quickly on the higher end.
2sleepy,
Diane gives some good advice, but keep a few things in mind. HGTV is feel good candy. It’s seldom reality. Home renovations are not a good idea if you are selling (painting and minor repairs are not renovations). For every dollar spent, you’ll probably only get $.85 back (most often, less), unless you are handy and do the work yourself. And, all buyers have varying tastes, so you should renovate your own home to your own tastes, and for your own enjoyment. When it comes time to sell, someone with similar tastes will appreciate it.
It should be pointed out that shows like Flip This House, Flip That House, Property Ladder, etc. are far from reality. In fact, Sam Leccima of Flip This House fame has been exposed as a fraud. As it turns out, all of the numbers he provided were fictitious (purchase price, renovation costs, time spent, sold price, etc.) and he never even owned the homes (or sold them) as he had pretended.
Here’s the link:
http://tinyurl.com/32xs3o
2Sleepy, I think what you may need at this point is to bring a Realtor into your home (who works with lots of buyers) to evaluate it on a one-on-one basis. Without seeing the house, the neighborhood, your interior choices, etc. I can’t safely recommend specifics. Let me know if you’d like me to come by and take a look, no strings attached.
Thanks for the advice, and Diane, I will be calling you and taking you up on that offer. We don’t improve our house to get rich, we improve it for our own pleasure, but when making renovation decisions I think it just makes sense to make choices that at least don’t detract from the value of your home.
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