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The Positive Side of a Slowing Market

You need to sell your home, but your hometown market is slowing down. No more multiple offers, no more offers over list price. If you sell your home, you won’t make as much of a windfall as you’d hoped to. 

Homes that are selling have significant upgrades and improvements, including fresh paint and carpet, repairs, and possibly professional staging, which means you’ll have to spend more money than you want to in order to sell your home. 

A year ago, your neighbor sold their home for $300,000. Their house was virtually the same as yours with the same builder and identical features, but your Berkshire Hathaway HomeServices network professional showed you market comparables that show recent solds in your neighborhood between $270,000 to 290,000. 

It’s hard to leave money on the table, but there’s a flip side to selling for less.  Buying for less. The best way to recoup the money you lost by not selling last year is to buy another home, especially if you trade up. Sound crazy? Trade up to a larger or pricier home in a more expensive neighborhood, you’ll make up any perceived losses quickly. Here’s how. 

Let’s say that a year ago better homes in your neighborhood were selling for $400,000, but the market has softened, and home prices are down about 5%. If your $300,000 home is worth only $285,000 today, you can assume those $400,000 homes should also be selling at a discount - at around $380,000.  You may have lost $15,000 while they lost $20,000. 

If you had sold your home when your neighbor did, you may have reaped the $20,000 then, but if you had traded up then, you would have had more difficulty qualifying for a $400,000 home, plus your payments would be higher and you would have still lost the equity in the market downturn. 

It may appear that buyers have all the advantages today – lower home prices, seller concessions, higher inventories of homes from which to choose, and low interest rates, but those advantages are also available to you. If you buy today, you’re not only buying at a discount from a year ago, you’re buying with a much cheaper loan because mortgage interest rates are at rock bottom. Hello bigger, better house. 

You can expect lower offers in a slower market, but if your home is priced fairly and is in pristine condition, it will be treated with respect and enthusiasm by buyers. Consider pricing slightly below market o attract more interest from buyers. 

Real estate markets grow and they decline just like the economy. When the stock market wobbles, your broker advises you to buy more equities. So, what are you waiting for?  For home prices to go up?  Do the math – sell for less, buy for less, or wait and sell for more, and buy for more. 

If you want to get the most house for the money, the time to buy is when the market is still uncertain and other buyers are on the sidelines, and there’s no telling how long that will last.