Time to Move Up? Now May Be the Perfect Time.

Posted by Pat Koch

March 26, 2008

With all the negative talk in the media, why should we sell our house? The value of our home has gone way done. We made all these improvements and why should we sell for so much less? These are all very true statements. No body wants to give their home away. Now lets look at the other side. Your family has out grown your home. We need another bedroom. A home with a pool would be nice. This commute is killing me. These are all good reasons to make that move. Then go back to loosing money on your home. Here are some things to think about.

1. The thoughts going thru the mind of the seller of the home you would like to buy, are the same as yours.

2. You will be buying like for like. Say your homes value went down 20 percent, so did the value of the home you would like to buy. We will look at this from a dollar and cents point of view

3. Let’s look at your home. Say you bought your home in 2003 for $375,000 and you put 20% down ($75,000) and did not take out any other loans. Now even after the home values have come down you sell your home for $475,000, take out all the fees to sell you home and pay off your loan, you will have approximately $145,000 in your pocket. Subtract your initial down payment. That is a profit of $70,000. That is a return of over 15 % a year. Not bad.

4. Lets look at the home you would like to buy and the associated costs. The home you would fit your needs, you can now buy for say $675,000. The difference being $200,000. Now let’s say you wait till the value of the homes goes back up by 20%. Your home now sells for $570,000. That’s $95,000 more. Sounds nice. What do think happens to the home you want to buy? It will also increase by 20%. The new price is $810,000, $135,000 more than before. Another way to look at it the home will cost you an additional $40,000. Besides costing you an additional $40,000, there will be more property taxes to pay. If the home value goes up by $135,000, that will work out to 1% percnt of the sales price or $1350.00 dollars every year there after.

The bottom line to all of this is. If moving up is the right thing to do for you and your family. Now may just be the perfect time.