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Buying or Selling a Home/Selling & Buying In This Market (10/09)

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Expert: - 10/4/2009


Question
I think that this is a great market for buyers, which means not so great for sellers.  I can afford my current home; however, would like to find a larger home, would you advise a short sale of my current home to get into a larger one?  I am like most homeowners that owe more than the current value.  A short sale would hurt my credit.  Would it be better for me to wait out this market?

Answer
Hello Jo - This is an excellent question which more homeowners should be asking. Lets first talk about the concept of investing. Buy Low, Sell _______, correct "high". But the this is not the truth. Markets are rarely in neutral position. In reality they are either in a buyers market or a sellers market. As you have elloquently proposed, when in a buyers market, is it appropriate for a seller to consider selling. The answer depends on equity and position. You must have equity to cover the costs of sale. If this requirement is met, then the answer to the question you have posed is an astounding "YES, SELL". Why you may ask? Well the actual decision as to whether this is a good decision is based on the market and your BASIS in your current property. If you have equity to cover the sale at a purchase price that allows you to be competitive in this market than this is no worse a time that if it were a sellers market. Look at it from this perspective. Selling in a depressed market and buying a larger property in a depressed market means both properties are at the same basis. Sell in a boom market and buy in a boom market, the same. If you are able to buy in this market without the sale of your existing property hold your existing property until the market recovers, well in this scenario you can buy low and sell high. If you must sell in this market to have the finds necessary to buy in this market then you need to find the right REALTOR. Why, because the decision is one of strategy not the typical sale. In this scenario (buy and sell a primary residence in the same market) you need a REALTOR who understands the concept. It now becomes a dollar per square foot strategy. Sell your existing property for a higher dollar per square foot than you pay for hte new property and you have in effect beat the system. When a recovery occurs... a property is typically valued based on comparable sales. What if the property were to burn to the ground... how much would it costs to replace it? Certainly more than the dollar per square foot you paid in the depressed market. What does this mean? It means that from a cost of sale perspective the new property will appreciate more than the smaller property ever would have during the same period. There in lies the answer to your question. Todays market is the best time to move up. Please understand this is one opinion. You should diligently seek assistance from a local REALTOR in your area who possesses an understanding of the market in your specific area. The same concept should apply, although there may be other local considerations not mentioned in this reply. -  I hope this answer has provided clarity to your question. If you would like additional information please reply. - Todd Menard

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Todd C. Menard

Expertise

National Association of Realtors Code of Ethics and Professional Standards * Contract Questions: 05/05 Arizona Real Estate Purchase Contract, Exclusive Buyer Broker Contracts, Listing Contracts and associated contract documentation as it relates to boilerplate, covenants, contingencies, procedures and procedures. * ARMLS Arizona Regional Multiple Listing questions * Real Estate Professional Standards and Practices, Ethics, Obligations, Duties * Agency relationships in Arizona, Procurring Cause * Questions typicaly arising during the listing period * Questions typically arising during the escrow period * Questions about working with a real estate agent/REALTOR * Questions Related to New Home Builders

Experience

National Association of REALTORS Board of Director (2011) Arizona Real Estate Salesperson License (1991-1995), Arizona Real Estate Brokers License (1995-Present), Arizona Association of REALTORS Board of Directors (2008-Present), Arizona Association of REALTORS Professional Standards Committee (2008-Present), AAR Certified NAR Code of Ethics and Professional Standards Instructor, Southeast Valley Regional Association of REALTORS President-Elect (2011) Southeast Valley Regional Association of REALTORS Board of Directors (2008, 2009), Southeast Valley Regional Association of REALTORS Grievance Committee Chairperson (1998-2007), Southeast Valley Regional Association of REALTORS Bylaws Committee (2008-Present), Southeast Valley Regional Association of REALTORS Education Committee (2008), Arizona Association of REALTORS Forms Committee - Residential Purchase Contract (2005), Arizona Association of REALTORS Forms Committee - Residential Rental Agreement (2008), Arizona Association of REALTORS Forms Committee - Buyer Broker Agreement (2009), Arizona Association of REALTORS Presidents Advisory Group, Road to Professionalism (2009), Arizona Association of REALTORS GRI Curriculum Review Committee (2009), Arizona Department of Real Estate, Commissioner's Education Advisory Group Sub-Panel B (2010) Arizona Department of Real Estate, Commissioner's Statute and License Review Committee (2007)

Organizations
National Association of REALTORS, Arizona Association of REALTORS, Arizona Real Estate Educators Association (AZREEA), Arizona Regional Multiple Listing System (ARMLS), American Notary Association, Southeast Valley Regional Association of REALTORS (SEVRAR), Southeast Valley Regional Association of REALTORS Women's Council of REALTORS (2010-Present), Phoenix Association of REALTORS (1994-2000, 2005-2009), Scottsdale Association of REALTORS (1994-2000, 2005-2009), Maricopa/Glendale Association of REALTORS (1994-2000, 2005-2009),

Publications
"Real Estate in 2008"- Lifebushido Publishing (Contributory Author), SEVRAR Magazine, Internet Crusade, RealTown ListServe, Blogger.com, Active Rain

Education/Credentials
- AAR Certified Ethics and Professional Standards Instructor, Graduate REALTOR Institute (1993), Certified Negotiation Expert (CNE), Over 100 Hours of annual real estate continuing education, Annual Ethics and Professional Standards Development Workshops as required by the National Association of REALTORS, Approx. 36 hours of NAR Code of Ethics training annually, Numerous IDW, Seminars and Train the Trainer programs, Business Management Degree - 1981

Awards and Honors
2009 REALTOR of the Year Award, Southeast Valley Regional Association of REALTORS (10,000+ Members), Double Platinum Production Award ($45,000,000 Sales Volume)- Keller Williams Realty Int'l (2001), Top 15 Sales Production Keller Williams Realty International (2001), Top 5 Sales Producation Keller Williams Realty Southwest Region (2001), Top Recruiter Award - Keller Williams Realty Int'l, SW Region (2002), Who's Who in U.S. Executive (1983), Who's Who in U.S. Real Estate Professionals (2007)

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