Janis Peterson, GRI, ABR, CSP Realtor®
Booming real estate markets tend to develop a momentum of their own. As more and more for sale signs are followed by sold signs in a given neighborhood, homeowners start to wonder if it isn't time to "move up" to a larger home and take advantage of strong demand, rising prices or both.
Before deciding to sell your home, you should carefully consider your goals. Often you will have a particular style, size or neighborhood in mind when considering a move. The important thing to remember in boom markets is that the boom is only a trend or an overall average. Within any given boom market there are always lagging markets, difficult properties and scarcities that can develop.
For example, although the market is taking off, your property may not be the type that is leading the way. If demand rises sharply for single-family homes, condominiums may not necessarily be easy to sell at the same time. Selling your two-story home to search for a single story home may not be a good idea in a boom market where these single level homes are in scarce supply. The best time to take advantage of a strong market is probably when the home you have is in greater demand than the home you want. Take a look at the population dynamics of the communities involved, are large family homes going to be in greater or lesser demand in ten years? These are not always easy questions to answer, but a competent real estate professional should be aware of long-term forecasts for your area. If you are planning to move to a less expensive home, consider doing so in a strong real estate cycle. The extra value that you receive for the sale of your home should exceed the premium that you pay in a hot market for a smaller home.
If you do sell in a boom market with the intent of "moving up", you should be prepared to buy again quickly. Depending on the value of your home and the new one you want to buy, prices can escalate quickly in a matter of months. Your real estate professional will be able to discuss effective strategies for timing your sale and your purchase together in a way that does not keep you out of the market at the expense of your investment value.
Putting these cautions aside, periods of strong demand and rising prices can often be the best time to sell your home. Periods of strong demand combined with a lower than normal housing inventory is known as a sellers' market. The law of supply and demand pushes prices upwards as more buyers compete for fewer properties. Buyers tend to demand less from a seller in a strong sellers' market. Homes usually sell faster and with shorter escrows because of the eagerness of buyers and sellers to act quickly.
If you are planning a move from an older home to a newly built home, a boom market may be a good time as well. The buyers looking at your home will place fewer demands for upgrades or other deal sweeteners because they know other buyers are competing with them. When you decide to purchase a new home, you are less likely to have demands that are difficult for the seller to meet. None of the repair problems associated with an older home come into play, for example.
Your best strategy for deciding on the timing of your sale may be to ask your real estate professional for a comparative market analysis. This analysis will provide you with an idea of the market conditions in your area and present a good opportunity for you to ask questions unique to your community and neighborhood. If you decide to list your property, your "for sale" sign could become a "sold" sign before you know it.
"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, ABR, CSP Realtor® can be reached at (610) 642-3744, e-mail: email@example.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.
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