The Home Selling Game: Knowing When to Sell

By Stevie Duffin Updated on 3/22/2013

By Daniel Duffield

Whether investing in a rental property or simply moving-up from a new home, real estate requires the precise knowledge when to buy or sell, and the successful application of this knowledge will determine the profit of the transaction.

For homeowners hoping to take advantage of the Spring buying season and move-up by purchasing a larger home, industry professionals recommend that buyers remain conscious of the rapid appreciation of home prices during the current housing recovery.

Home buyers hoping to sell their homes at the maximum value by waiting until home prices increase further should be cautious, as experts advise that the profits of such a strategic move will be contingent on the timeframe in which the original home was purchased.

According to Daren Blomquist, vice president of RealtyTrac, homeowners who bought their properties at the bottom of the market within the past two or three years should seriously consider moving up in 2013.

Since they purchased homes during the downturn of the market, these homeowners have most likely accumulated a sufficient amount of equity toward a new home purchase, and any further waiting would most likely not be any more beneficial, as potential homes to buy may be appreciating at around the same rate, said Blomquist.

He also suggested that now would be an ideal to purchase for many due to the dwindling window to obtain the low mortgage rates currently available, which many expect to rise significantly this year. According to statistics from the Mortgage Bankers Association (MBA), mortgage rates are assumed to hit 4.4% during the next twelve months, with the 20-year average potentially rising to as high as 6.5%.

 

 

Real estate broker Redfin indicates that such represents why homeowners hoping to sell their current residences should not hesitate at such a critical period. Although waiting several years could mean that the borrower could sell his or her home for a greater amount, it could also mean that the purchase price of the new property would be considerably higher as well, perhaps even more than that of the original property.

Despite this encouragement to sell, Blomquist also cautions homebuyers against rushing into a home purchase immediately after selling.

According to RealtyTrac statistics, additional foreclosure inventory will be hitting the market within the next six to twelve months as a result of the spike in foreclosure activity in 2012, with markets such as Florida, Illinois, Ohio, Pennsylvania, New York, and New Jersey seeing a boost in housing inventory.

Blomquist suggests that it could be especially advantageous for prospective move-up buyers to sell their homes in the spring while housing inventory remains scarce and holding off on a home purchase until the fall when more foreclosure properties become listed.

However, for homeowners that purchased during the peak of the housing industry immediately before the burst of the housing bubble – approximately five to seven years ago – it may be more beneficial to wait until prices rise further before moving up.