Sell Now - Buy Up..... It's a Win Win Situation

Many people are holding off selling their current homes because of the declining property values in the metro Detroit area and frankly most of the country. What many people don't understand is that this may be the most opportune time to sell and buy a more expensive home (buy up).

If you wait until the market goes up, and your house value increases, then the homes you are looking at purchasing have also increased in price.

Here is an example of how buying in a down market can be beneficial:

Assume your current home was valued at $250,000 some time back. Now it is currently worth $230,000. You would assume that you have lost $20,000 in equity. But on the other hand, the more expensive home, you are considering buying was worth $500,000 a year ago and is now valued at $450,000. You will save $50,000 on the purchase of this new home. So in short, you lost $20,000 on the sale of your home but saved $50,000 in the purchase of the new one. You just made $30,000 in equity.

Another thing to consider when contemplating buying in a down market is interest rates. Interest rates are nearing all-time lows right now. As they creep back up you reduce your buying power. For every 1/2 percent interest rate increase you have $25,000 less in purchasing power.

To sum this all up, selling in a down market and buying a more expensive home, assuming both properties have depreciated at roughly the same rate, is a very smart thing to do. You can actually come out ahead, but waiting for the market to head back up can cost you more money than buying now.

A good strategy is to weigh all the pros and cons and consult a qualified realtor to assist you. If you would like to discuss all your options, please feel free to contact me at 248.854.3829.