Buying a Home, Selling Another in the Down Economy

As anyone attempting to sell a home right now knows, the market is definitely not friendly for a home seller. On the other hand for buyers this is a fantastic market where anything goes in negotiations. This is the opposite of what occurred a couple of years ago in real estate. Fortunately for a home seller they can rely on the fact that although they are going to lose a lot of money on the sale of their home the flipside is that in their home buying experience they are likely to be able to fetch a great deal. The other advantage is that most buyers are step-up buyers, which means the new house they are buying is going to be more expensive than their current home. This means that even though they may lose money on the sale of their current home they should be able to more than make up for it on the savings on the new home they purchase. This counter intuitive point though does have a few issues with it. The complications primarily have to do with financing. It is very difficult to sell a home when you owe more on it than it is worth and unfortunately that is all too often the case. Banks are also very reluctant to loan on the new home until the old one sells today and selling a home at the exact same time as buying a new one is complicated and typically there is some overlap. It would be nice for banks to provide a solution for this problem but it is not likely to occur anytime soon. Posted by Colleen Lane on February 10th, 2009

For a short time we saw the step-up market disappear simply because sellers were not willing to take a loss on their home. However, we're now seeing an increase in step-up buyers and also downsizing buyers. In most cases they are willing to sell their home for less, but they expect to make it up on the purchase of their new home, and at today's prices they can!

Tina

Posted by Tina Fountain on Tuesday, March 3rd, 2009 at 3:19am

No solution yet for people who own a home and would like to buy now, in fact the guidelines are stricter since your post. It use to be easy for a homeowner to rent their home out, to offset their current mortgage. Now that is not the case. Your right, it would be nice to have a solution to this problem, like the bridge loans of yesterday.

Posted by Toby Lane on Thursday, August 6th, 2009 at 1:15pm

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