Strategy For South Florida Homebuyers Who Are Trading Up
Real estate is an ever changing market for both Sellers and Buyers. Many homeowners and tenants are now finding themselves in the position of wanting to trade up.
Because the market has cooled a bit over the past 2 months it is allowing the Buyers to catch their breath and locate that new property. There are several ways to benefit from trading up when going into the next property. Property appreciation is moving at a slower pace but economists agree that it is a good time to raise the bar if you can afford it. Because there are more homes for sale the competition is lessening. Interest rates are still low so the combination of these two points makes it appealing for those who can realistically afford a larger property or one with a better location. Homes are sitting on the market longer than even a few months ago. It is wise to use your position as a Buyer to your benefit. You may be able to get the Sellers to pay for the home inspection. You may also get the Seller to cover some or all of the closing costs. Sellers have cooler heads now and will work with Buyers rather than just moving onto the next deal. Interest rates are expected to remain low or even decline over the next few months. The idea is to continue to attract buyers. The Fed may change this over the next 6 months which will edge interest rates upward. New mortgage regulations will also come into play after the first of the year which will limit some borrowers from obtaining loans. Borrowers will have to meet stricter rules regarding their debt including a 43% debt to income ratio. If a Buyer already owns a property it is best to price it realistically and create a quick sale. Most properties will sell within 1-2 months of the listing date. Once a listing gets cold it is far more difficult to get an offer close to asking price. One very creative way for Buyers to move onto the next property is to structure a lease-back option into the contract. This allows the Seller to become the tenant. This also allows the Seller to pay off their old mortgage and gives them the ability to obtain a new mortgage on the trade-up property. The proceeds from the sale allow the Buyer to write a stronger contract because the contingencies will be removed. This is very effective in this market because contingencies slow the process and this market is moving fast. Building a new home comes in handy when you want to trade up into a larger property or build one with more of your own personal desires. A Buyer can custom design their dream home with all of the latest finishes and floor plans. Many Buyers will go this route over remodeling an older property. In today’s hot Fort Lauderdale real estate market it is great to see new homes being constructed again whether they are builder speculation homes or homes built for specific buyers. If you are thinking of a trade-up purchase make sure you plan to stay in your new trade-up property for at least 7-10 years because it will protect you from owing more than your home is worth because of the potential to build equity in your new home. If you see yourself moving in 2-4 years only buy what you need and be more conservative with your purchase dollars.
