Pointers for Trade-up Buyers Seeking a 'Forever' House
Months into the pandemic, a middle-aged couple with two teenagers became fed up with their city condo. With everyone home, it felt way too crowded. So they vowed to move up to a much more spacious suburban place with a yard.
“Sure, it was convenient. But to heck with downsized living. We needed liberation,” recalls the wife, a government consultant.
Given that homebuyers now greatly outnumber sellers in most popular suburbs, the family knew they’d have to scramble to compete for a trade-up property. But they vowed to take on the competition.
“We were determined to win the kind of forever house we’d been fantasizing about,” the consultant says.
It took several weeks for the family to locate the sort of place they were seeking. To beat out rival bidders, they added an escalator clause to their offer, promising to pay $1,000 over the highest bid that came in. Also, the consultant composed a persuasive letter to the elderly seller, telling her how much the family appreciated her place.
“That letter made all the difference because the owner had babied that house for many years, keeping it in exquisite condition,” the consultant says.
Mark Nash, a veteran real estate analyst, doesn’t know the family in this true story. But he empathizes with those now seeking larger quarters.
“These days, trading up to a big suburban place can be nearly as hard as buying a first home,” says Mark Nash, a longtime real estate analyst and author of “1001 Tips for Buying and Selling a Home.”
Steadily rising home prices, combined with higher mortgage rates, are now doubly disadvantaging buyers, says Lawrence Yun, chief economist for the National Association of Realtors (nar.realtor).
“Housing affordability is weakening. Various stimulus packages are expected, and they will indeed help. But an increase in inventory is the best way to address surging home costs,” Yun says.
Here are pointers for move-up buyers:
Disconnect emotionally from your current place.
Surprisingly, many who want to sell their property in favor of a better one have a tough time letting go of their current domain, says Sid Davis, the author of several real estate books. The problem is that many who are emotionally attached to their property find it difficult to price realistically -- especially now, when sellers rule in many areas.
“Subconsciously, many sellers think they’re entitled to a higher-than-market price because they love their house and think it’s better than any other place for miles around,” says Davis, a veteran real estate broker.
But given the psychology of buyers, most so resent an overpriced property that they’ll refuse to bid on it. Therefore, a beloved house with too rich a price tag can sit unsold for a period of time, creating a serious snag in the plans of owners who wish to trade up.
“Even now, people who get greedy reduce their odds for an expeditious sale,” Davis says.
How can you loosen ties to your current property so as to be emotionally free to move on to a larger or more luxurious home?
Davis recommends that before setting your list price, you do a brief tour of the trade-up properties available in your price range in the area where you wish to live.
“Looking around at other options can flip the switch in your brain and cause you to get excited about buying that better house,” he says.
Always remember resale potential when buying a home.
If you’re trading up to a better property for the second or third time, you may assume your next property will be your last. But statistics show that many owners sell sooner than expected, says Dorcas Helfant, the co-owner of several Coldwell Banker realty offices.
“Your plans are one thing, but what happens in real life is another,” says Helfant, who cites financial and health issues as reasons why many sell sooner than they anticipate.
Regardless of how long you stay, you’ll want a place that not only holds its value but appreciates. That’s why it’s wise to look for features that will gain in value over time, such as those that help keep utility bills to a minimum.
Helfant says good bets for future appreciation are energy savers -- including extra attic insulation, double-paned windows and high-efficiency appliances. In addition, look for an open floor plan that should retain its popularity over time.
“People do want home offices with doors they can close for privacy. But other than that, they dislike chopped-up floor plans with lots of small, self-contained rooms. They favor a kitchen that flows directly into a spacious ‘great room,’” she says.
Consider choosing a brand-new home.
All available homes are in short supply in coveted communities, including in new subdivisions. Builders are facing rising costs related to both land and materials. Even so, Davis says buyers who are attempting to acquire a more spacious place can sometimes get a better deal on new construction than on a resale property.
“Look at pricing on a square footage basis. You could be surprised at how far your money will go on a brand-new place when it’s a really large house you’re chasing,” he says.